Preamble

The House met at a quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Stretford and District Gas Board Bill [Lords],

As amended, to be considered To-morrow.

Ayr Burgh (Electricity) Bill [Lords] (by Order),

Second Reading deferred till Tomorrow, at a quarter-past Eight of the Clock.

Girvan Water Order Confirmation Bill,

Read the Third time, and passed.

Taw and Torridge Fisheries Provisional Order Bill,

Towy Fisheries Provisional Order Bill,

Read the Third time, and passed.

Buckhaven and Leven Gas Commission Order Confirmation Bill (by Order).

Considered.

NEW CLAUSE.—(For protection of county authorities.)

The following provisions for the protection of the County Council of the County of Fife and the Kirkcaldy District Committee of that County Council (who for their respective rights, jurisdictions, and interests are hereinafter referred to as "the county authorities") shall have effect (that is to say):—

(1) All mains, pipes, and works to be laid by the Joint Gas Commissioners in or along any highway, road, street, or bridge repairable by the county authorities shall be laid with all reasonable despatch. The Joint Gas Commissioners shall with all reasonable despatch complete their operations and restore the said highway, road, or bridge to the reasonable satisfaction of the road surveyor of the county authorities;
(2) Any question which may arise between the Joint Gas Commissioners and the county authorities or the said road surveyor under this Section shall be referred to and determined by an arbiter to he nominated, failing agreement between the parties, by the
1814
sheriff of Fife and Kinross on the application of the Joint Gas Commissioners or the county authorities and the decision of such arbiter shall be final.—[Mr. Munro.]

Brought up, and read the First and Second time, and added to the Bill.

Bill to be read the Third time To-morrow.

Oral Answers to Questions — INDIA.

CIVIL SERVICE PENSION FUND.

Sir WILLIAM DAVISON: 3.
asked the Under-Secretary of State for India whether his attention has been called to the widespread apprehension among European members of the Indian Civil Service with reference to the Indian Civil Service Family Pensions Fund, having regard to the fact of the large number of Indian civil servants who are now coming upon the fund, whose conditions of family life are widely different from those of Europeans; whether, under these circumstances, the Government of India will be prepared to rescind the decision arrived at some years ago to extend the benefits of the fund to non-Europeans; and whether the fund will be forthwith divided into two sections, one European and one Indian, with separate accounts and separate actuarial calculations.

The UNDER-SECRETARY of STATE for INDIA (Earl Winterton): I have already had under consideration the effect on the Indian Civil Service Family Pension Scheme of the increase in the numbers of Indians in the Civil Service. It is not possible, however, at this stage to make any statement on the matter.

Sir W. DAVISON: Has the Noble Lord fully before him the fact that this fund was constituted almost entirely by the contributions of the British civil servants, and that no Indian contributions at all were made to it before 1913, and then very few? Is there any reason why it should not be divided into two parts?

Earl WINTERTON: The whole question is under consideration, and the facts mentioned by the hon. Gentleman will, of course, be taken into consideration.

EUROPEAN GOVERNMENT SERVANTS.

Mr. HOGGE: 7.
asked the Under-Secretary of State for India what steps he proposes to take to ensure that equality of treatment is given to all services and to all European Government servants in India?

Earl WINTERTON: Perhaps the hon. Member would be so good as to indicate in what respects he considers that inequality of treatment exists and should be remedied.

Mr. HOGGE: Is there not a difference between the ordinary Civil Service and the Indian Medical Service?

Earl WINTERTON: There are and always have been differences, but I am not sure what is the specific difference to which the hon. Gentleman alludes.

Mr. HOGGE: Will my Noble Friend consider putting the Indian Medical Service on the same terms of equality with regard to pensions and commutation as members of the ordinary Indian Civil Service?

Earl WINTERTON: My hon. Friend is aware that members of the Indian Medical Service are not the only ones affected in that respect. I will consider the whole matter.

Lieut.-Colonel FREMANTLE: Will the Noble Lord consider this matter from the point of view of the absolute difference between white and black in attending on white patients?

Earl WINTERTON: That is a very big question and one very difficult to answer at Question Time. I referred to it in my speech the other day. The whole matter, however, is receiving the earnest consideration of my Noble Friend.

COMMITMENT WARRANTS, PUNJAB.

Colonel Sir C. YATE: 9.
asked the Under-Secretary of State for India whether he will state the terms of the Instructions recently issued by the Lahore High Court to its subordinate magistracy, laying it down that on warrants of commitment the trying magistrate has to note whether the convict is of a superior status by reason of his educational attainments or social position?

Earl WINTERTON: I will ask the Government of India for a copy of the Instructions in question, which have not
reached the Secretary of State. Their issue would be in accordance with a rule framed by the Punjab Government as to the classification of Special Class Prisoners as such, by reason of the nature of the offence and the antecedents of the offender including his social position, education, and standard of living.

Sir C. YATE: Is there anything in the law in India that warrants men being treated according to their social position?

Earl WINTERTON: As I have endeavoured to explain in my answer the Punjab Government under the administrative powers it possesses has issued a circular on this subject, and if, as my hon. Friend suggests, there have been these differences made, they have been carried out under the rules.

Sir C. YATE: Will the Noble Lord ask the Secretary of State to alter the rules?

Earl WINTERTON: Most emphatically certainly not. This matter is within the competence of the Legislative Assembly, and it would be impossible for my Noble Friend to suggest to the Legislative Assembly that it should go back upon what is within its competence.

Oral Answers to Questions — MILITARY FORCES, GERMANY.

Major BOYD-CARPENTER: 10.
asked the Secretary of State for War whether he has any information that the German officers' corps of the old army still exists; and whether it is officially recognised by the German military authorities?

The SECRETARY of STATE for WAR (Sir Laming Worthington-Evans): The number of officers with the present army is restricted by the Treaty of Versailles to 4,000. All other regular officers have been retired on pension, or with a gratuity. The German authorities have recognised a society known as the Deutscher Offiziers-bund as the channel of communication for regulating questions affecting the pensions or other economic interests of ex-officers. This society has been formed since the War for the protection of those interests. There are other associations of officers which are not recognised, and which are in the nature of political associations.

Major BOYD-CARPENTER: 11.
asked the Secretary of State for War whether he has any information that the so-called
peace army in Germany of 100,000 effectives consists almost entirely of noncommissioned officer instructors?

Sir L. WORTHINGTON-EVANS: I am aware that about half the rank and file of the present German army were noncommissioned officers in the old army. This is due to the fact that the majority of the volunteers for long service were of this class.

Vice-Admiral Sir R. HALL: 15.
asked the Secretary of State for War whether the German mobilisation laws have yet been repealed?

Sir L. WORTHINGTON-EVANS: The Inter-Allied Military Commission of Control have reported that the German Government have repealed all laws relating to mobilisation, with the exception of the law of 13th June, 1873, relating to requisitions in time of mobilisation. The Commission have demanded the repeal of this law also.

Lieut.-Colonel JAMES: 16.
asked the Secretary of State for War whether, having regard to the limitation of the German Army to 100,000, the Estimates put forward by the German Government compare favourably in the matter of expense with the Estimates of the other European Powers?

Sir L. WORTHINGTON-EVANS: The whole question of the German Budget, including the Army Estimates, is at present being examined by the Guarantee Committee of the Reparation Commission, and I regret am unable to anticipate their opinion.

Captain Viscount CURZON: 17.
asked the Secretary of State for War what is the mobilisation organisation of the German Army; whether the arrangements for mobilisation in pre-War days are still in existence; whether he has any information as to the operation of the 12 years' term of enlistment in the German Army; whether this has now been put into force; and whether large numbers of men of military age have been passed through the ranks of the Reichwehr for short periods of training?

Sir L. WORTHINGTON - EVANS: Article 178 of the Peace Treaty unconditionally forbids "all measures of mobilisation or appertaining to mobilisation,' and I am unable to confirm that any such
measure exist. The 12 years' term of service is in force, and its operation is being supervised by the Inter-Allied Military Commission of Control. I have no confirmation of the suggestion contained in the last part of the question.

Oral Answers to Questions — NAVY AND ARMY CANTEEN BOARD.

Sir W. DAVISON: 12.
asked the Secretary of State for War how long Messrs. Deloitte, Plender, Griffiths and Company have been engaged in the preparation of the trading accounts of the Navy and Army Canteen Board for 1919 and 1920; and when their Report will be available for the information of the House?

Sir L. WORTHINGTON-EVANS: The firm in question has been employed as auditors of the accounts of the Navy and Army Canteen Board since the inception of the organisation in 1917. I am unable to give a date as to when the accounts for the years in question will be available for the information of the House, but I can assure my hon. Friend that they are being pushed forward as rapidly as possible.

Sir W. DAVISON: Is the right hon. Gentleman aware that that answer has been returned for months past and that at the end of last Session we were told we could hope for the accounts in eight days?

Mr. BRIANT: Are we to understand that the accounts for 1919 are not yet completed?

Colonel ASHLEY: Can the right hon. Gentleman definitely state what is the trouble, and why these accounts are being withheld?

Sir L. WORTHINGTON-EVANS: I am sorry if anyone thinks they are being withheld. I am not suggesting there is not some justification for the thought, but I can assure the House I am getting the accounts pushed forward as quickly as possible. They are extremely complicated and complicated also by the fact that there were three organisations, each of which went into liquidation and each one passed some part of its assets and stocks to the next organisation. I hope the accounts will be available for the House in a short time. It is no use my saying eight days or a month, because I really cannot give a guarantee.

Sir D. MACLEAN: May I ask whether, in view of the great public interest in this matter, the right hon. Gentleman will give the House an assurance that these accounts will be presented in ample time for a discussion, if necessary, to take place on the Floor of this House with regard to them?

Mr. MURRAY MACDONALD: Is not the delay due mainly to the difficulties of realisation?

Sir L. WORTHINGTON-EVANS: I do not want to take refuge in that. There has been great delay in apportioning the current stocks between each one of these organisations, and it has been due also partly to difficulties of realisation. But I may say this: I shall have to come to the House presently either for a Vote on Account or for a Bill to implement the undertaking to the Ex-Service Men's Associations to hand over the profits of the canteens, and at that time there will be an opportunity for the fullest discussion of this question. I do not want to deprecate questions, but I have half-a-dozen every week, and to them I can only give the same answer.

Sir D. MACLEAN: Will the Report be available on that occasion?

Sir L. WORTHINGTON-EVANS: It is obvious the House must have the information which will enable it to come to a decision on that occasion, and before then the accounts must be available in some form or other for the House.

Oral Answers to Questions — EXPEDITIONARY FORCE CANTEENS.

Sir W. DAVISON: 13.
asked the Secretary of State for War if he will give the date on which the War Office sent a letter of indemnity to the late Controller, Expeditionary Force Canteens; the date on which the latter handed cash and War stock to the War Office representative; the amount in sterling thus represented; what was the amount allocated from this source to the United Services Fund; the amount retained by the War Office; and for what purposes that money was utilised by the War Office?

Sir L. WORTHINGTON-EVANS: As regards the first part of the question, the letter was dated 4th February, 1921, but
was given to the joint liquidators, who did not hand it to the authorities of the Expeditionary Force Canteens until the transfer of their assets had taken place. In regard to the remainder of the question, the transfer, which was made to the joint liquidators and not to the War Office, took place on the 14th February, 1921. The value of the assets thus transferred, taking the securities handed over at their nominal value, was about 3,306,000, out of which £2,500,000 consisted of Funding Loan. Of this total, Funding Loan to the nominal value of £1,000,000 was allocated to the United Services Fund, and the balance remains in the hands of the joint liquidators.

Oral Answers to Questions — IRELAND.

DISBANDED SOLDIERS.

Viscount CURZON: 18.
asked the Secretary of State for the Colonies whether his attention has been drawn to the fact that three Irish soldiers home on leave, at Listowel, County Kerry, were surprised by armed men, deprived of their uniforms, and one wounded; and whether he will consider the advisability of disbanding Irish soldiers at the present moment, in view of the danger attendant on their return to their homes in Ireland at present?

Sir L. WORTHINGTON-EVANS: I have been asked to answer this question. With regard to the first part, the military authorities in Ireland are at present unable to confirm the facts alleged, but further inquiry is being made. With regard to the last part, I would refer my Noble Friend to the answer which I gave on the 25th ultimo to my hon. and gallant Friend the Member for the Shettleston Division of Glasgow (Rear-Admiral Adair).

Colonel ASHLEY: Will the right hon. Gentleman take steps, as he was good enough to promise some weeks ago, to bring these disbanded soldiers within the terms of reference of the Committee presided over by the hon. Baronet the Member for Chelsea (Sir S. Hoare)?

Sir L. WORTHINGTON-EVANS: At, this moment I cannot say "Yes" or "No." I have taken steps in that direction, and I hope they will be carried out.

Mr. LINDSAY: Are soldiers proceeding on leave to Ireland always allowed to proceed in mufti?

Sir L. WORTHINGTON-EVANS: I am afraid I must have notice of that question.

REFUGEES.

Brigadier-General COLVIN: 19.
asked the Under-Secretary of State for the Colonies, if the number of refugees to this country from Ireland is increasing; and whether he can give any estimate of the number of destitute or semi-destitute persons who have come to England for protection?

The SECRETARY of STATE for the COLONIES (Mr. Churchill): The answer to the first part of the question is in the negative. With regard to the last part, I regret that the information at my disposal is not sufficient to enable me to form an estimate of the total numbers. Assistance has been given by the Irish Distress Committee to approximately 150 persons. Applications received total 300.

Mr. GIDEON MURRAY: Will the right hon. Gentleman give consideration to the representations made last night by the hon. Baronet the Member for Chelsea with regard to setting up a Royal Commission to deal with these cases, in view of the fact that the hon. Baronet, as Chairman of the Committee, understands the position?

Mr. CHURCHILL: I do not think a Royal Commission is necessary, but I am considering whether my hon. Friend's Committee might not be somewhat enlarged, in order to enable it to undertake the other work which public Departments are pressing upon it, and I am discussing that with the Treasury. The Treasury have given carte blanche, within certain limits, to the present Committee, and they must necessarily be consulted if an addition is made.

Colonel GRETTON: Does the first part of the right hon. Gentleman s answer mean that refugees are not coming over in increasing numbers, or does it mean that no more are coming over?

Mr. CHURCHILL: I do not think that there has been any great egress in the last fortnight. On the contrary, I think it is slackening. At any rate, the fact that only 300 persons have applied in
three weeks certainly shows that the number of persons with whom we are dealing is confined within fairly definite limits.

Colonel GRETTON: Is it that they have ceased to come over, or that they are still coming, but not in increasing numbers?

Mr. CHURCHILL: We cannot tell whether there are a few refugees coming day by day, but I do not think there is any formidable exodus.

Mr. G. MURRAY: Will the right hon. Gentleman inquire into the position in Glasgow, where I understand that a very large number are coming over, and where it is probable that the Committee does not deal with them?

Mr. CHURCHILL: The allegation as to the refugees in Glasgow is that they come from Belfast, and are almost all Catholics. It is strenuously denied by the Northern Government, who say that no great exodus is taking place from Belfast to Glasgow.

Mr. MURRAY: Does it matter whether they are Catholics or Protestants, and ought they not to be looked after?

KIDNAPPING.

Mr. PENNEFATHER: 21.
asked the Secretary of State for the Colonies whether he is now prepared to make his promised statement in regard to the fate of the four Loyalists kidnapped from the Pettigo district by the Free State forces nearly three weeks ago?

Mr. CHURCHILL: There are many more persons kidnapped, and I am addressing the Provisional Government on the whole matter. Meanwhile, we are holding the persons taken at Pettigo by the British forces.

Mr. PENNEFATHER: Are we to understand that something like 20 persons were kidnapped by the Free State forces during the recent events at Pettigo?

Mr. CHURCHILL: My hon. Friend would be quite wrong in understanding that. Some were taken in the raid at Belcoo and others were taken in different forays on the frontier. We have proof
that some of them are being held at present at Athlone, and that only four were actually removed from Pettigo.

Mr. PENNEFATHER: My question related to the four loyalists who were kidnapped in Pettigo by the Free State forces nearly three weeks ago.

Mr. CHURCHILL: My answer related not only to those four but to others also, who were just as important.

Viscount CURZON: Does the right hon. Gentleman know that they are held at Athlone, and, if so, what steps exactly are the British Government taking in order to recover them?

Mr. CHURCHILL: I have said that I am addressing the Provisional Government on the whole matter, and meanwhile we are holding the 15 other persons who are in our possession.

Mr. PENNEFATHER: Does not the right hon. Gentleman think that, as nearly three weeks have elapsed since he first addressed inquiries to the Provisional Government, the Provisional Government are treating his inquiries with such scant respect that it almost amounts to contempt?

Mr. CHURCHILL: No, I do not think so at all. I think they are very anxious to get back their own fifteen men of the Free State forces whom we are at present holding, and whom we have been holding for exactly the same period.

Mr. PENNEFATHER: rose—

Mr. SPEAKER: I think we have now had enough supplementary questions on this matter.

REPUBLICAN COURTS.

Colonel NEWMAN: 22.
asked the Secretary of State for the Colonies whether he is aware that neither by British process of law or the law as administered by the Irish Republican Courts can British subjects domiciled in the Irish Free State collect rents or similar debts due to them, and are consequently in many cases being made bankrupt by their creditors for moneys owing in Great Britain; will he press that a moratorium should be established to meet such cases; and, if not, what means will he adopt to prevent the ruin of British subjects who are in reality perfectly solvent?

Mr. CHURCHILL: His Majesty's Government recognise the difficulty in which many persons are placed owing to inability in present circumstances to collect rents and other debts due to them in Ireland. This difficulty is not a new one; it has been a symptom of all periods of disturbance in Ireland, and can only be made to disappear by the removal of the cause from which it arises, namely, by the restoration of orderly and resolute Government. As I informed the House yesterday, His Majesty's Government think it right to give a further opportunity to the Provisional Government to effect such a restoration, and, in the meanwhile, they do not feel that the time has come to take any exceptional measures to deal with this as distinct from other evils arising out of the present state of disorder in Ireland.

Colonel NEWMAN: Is not the right hon. Gentleman aware that in former times, no matter how bad they were, we could always get British decrees in Ireland, and we could carry them out if we could get a force which had pluck enough to do it? Now we cannot get decrees.

Mr. CHURCHILL: I have nothing to add to the answer I have given.

Colonel ASHLEY: Could the right hon. Gentleman say, for the information of the House, what is the exact position of these so-called Republican Courts under the present arrangement? Are they legal courts or not?

Mr. CHURCHILL: They have no legal status at all, and they are not recognised in any official sense by the Provisional Government.

Colonel ASHLEY: Do I understand that there are now no courts of any sort functioning in the Free State where a law-abiding citizen can go to recover his debts or damages for injury?

Mr. CHURCHILL: Yes, there are two complete sets of courts functioning in the Free State which interfere with each other, have their decisions reversed by each other, repudiate each other's authority, and generally bring the whole process of common, civic justice, in the smallest matters as in the greatest, into utter confusion and contempt.

Colonel ASHLEY: Will the right hon. Gentleman write an opera on the lines of Gilbert and Sullivan?

LAND PURCHASE AND HOUSING.

Mr. T. THOMSON: 52.
asked the Chancellor of the Exchequer the total sum lent or guaranteed by the British Government to date for the purposes of purchasing land, farms, or for building houses in Ireland; and the average terms as regards interest, repayment charges, and length of loans?

Sir JOHN BAIRD (for Mr. Hilton Young): The hon. Member will find some particulars on these subjects in the Eighty-ninth Report of the Commissioners of Public Works, Ireland (Command Paper 1481 of 1921) and the last Report of the Irish Land Commissioners (Command Paper 572 of 1920), to which I would refer him.

Mr. THOMSON: Will the Government make similar grants to English and Scottish authorities for housing purposes?

Sir J. BAIRD: It is not in my province to deal with that.

Oral Answers to Questions — CONCESSION, PALESTINE.

Mr. L. MALONE: 20.
asked the Secretary of State for the Colonies whether he has information to the effect that in the early summer of 1920 Suleiman Rabbub and other well-known Bethlehem Arabs applied for a concession for electric light and power, agricultural development, and motor transport in the Jerusalem district and Jordan valley; that they stated that they were already in possession of a capital of half-a-million and would have no difficulty in raising £2,000,000 or more if necessary; and that Suleiman Rabbub was informed by the administration that no concessions were being made at the time, but that the application would be considered later; whether he will inform the House whether a Report has been received on this application; and, if so, what was its nature?

Mr. CHURCHILL: No information on this subject is on record either in the Colonial Office or in the Departments which dealt with the administration of Palestine during the period referred to. The officer administering the Govern-
ment of Palestine has been instructed to ascertain the facts and report them to, me.

Mr. MALONE: Will the right hon. Gentleman be able to give particulars next Tuesday in the Debate?

Mr. CHURCHILL: I hope I shall have the information by then.

Mr. SEXTON: Does not the right hon. Gentleman think that the introduction of electric light into Bethlehem is a glaring piece of vandalism?

Mr. CHURCHILL: I think that if my hon. Friend visited the Holy Land he would, see a great many glaring pieces of vandalism, which are not half so scientific or beneficial as the introduction of electric light.

Oral Answers to Questions — SCOTLAND.

DEER FORESTS.

Lieut.-Colonel A. MURRAY: 29.
asked the Secretary for Scotland whether he is yet in a position to say that legislation will be introduced at an early date to carry out the suggestions for immediate action contained in the Deer Forest Report, namely, the extension of deer forests to be forbidden by Statute except with special sanction from the Secretary for Scotland; an annual return of the stock of sheep and cattle in each deer forest to be made to the Board of Agriculture; and local committees; with independent chairmen, to classify the deer forests and determine the stock that each should carry?

The SECRETARY for SCOTLAND (Mr. Munro): On my instructions a Bill has been drafted on the lines of the recommendations of the Deer Forest Committee and the Committee on Game and Heather Burning. I am not, however, in a position to give an undertaking as to the date of the introduction of the measure.

Lieut.-Colonel MURRAY: Will it be introduced next month before the Recess?

Mr. MUNRO: I cannot give an under, taking. My hon. and gallant Friend must remember first of all the limited resources of the Scottish Office in the matter of drafting, and, secondly, the pressure of business at this stage of the Session.

STRAYING CATTLE, ANCRUM.

Mr. HOGGE: 30.
asked the Secretary for Scotland whether his attention has been called to the fining of two Ancrum residenters for allowing their cows to stray on the public road; whether these residenters had already applied to the Ancrum House estate for a field; whether they were unable to secure the same as they had all been let to a neighbouring farmer who already farms a large farm; and whether he is prepared to introduce legislation to prevent the possibility of such fines being imposed on respectable citizens while land is available?

Mr. MUNRO: I understand that two residents of Ancrum were fined recently for permitting their cattle to stray on the public road. I have no information on the points raised in the second and third parts of the question. In view of the risks arising from the straying of cattle on the public road, I am not disposed to take action on the lines suggested in the last part of the question.

Mr. HOGGE: Will the right hon. Gentleman make inquiries and find out if those applications were made?

Oral Answers to Questions — MURDER OF BRITISH OFFICERS, SOUTH KURDISTAN.

Lieut.-Colonel FREMANTLE: 23.
asked the Secretary of State for the Colonies if he can state the cause of the murders of Captain Bond and Captain Makant in South Kurdistan on 18th June; whether these murders are associated with that of Lieutenant Mott, killed at Halabja in South Kurdistan on 1st June, the death of Flight-Lieutenant Hudson in Iraq on 6th June, and the death in action of Captain Fitzgibbon in January last; and whether there is any change in the general attitude of the South Kurds since they showed their loyalty to the British Government during the Iraq rebellion in 1920?

Mr. CHURCHILL: The hon. and gallant Member has no doubt seen the Report which, after being communicated to the relatives of Captain Bond and Captain Makant, was published in the Press this morning. The murder of these two gallant officers was due to an act of individual treachery on the part of a local frontier chief. I greatly deplore their loss; but
I am assured by Sir Percy Cox that no political significance need be attached to the incident; that it is not connected in any way with the other occurrences mentioned by the hon. and gallant Member. There has been no change in the general attitude of the Southern Kurds.

Lieut.-Colonel FREMANTLE: What steps are being taken to arrest the said chief who is reputed to have done this act, and is it possible to arrest him?

Mr. CHURCHILL: Troops are moving; both cavalry and infantry are operating in the district, the Air Force is recon-noitring in the air, and we hope to bring the authors of this disgustingly treacherous breach of a parley to which these officers had been bidden to summary punishment and execution in the shortest possible time.

Lieut.-Colonel FREMANTLE: Does the right hon. Gentleman say that there is no connection between that and the quite similar murder of an officer only a fortnight before?

Mr. CHURCHILL: I am advised that there is no serious political significance to be attached to this incident. Of course, there is a considerable amount of uncertainty and unrest in regard to these very turbulent Kurdish frontier troops. Everyone who has to come in touch with them runs considerable risk.

Lieut.-Colonel FREMANTLE: Is it not a fact that during the Arab rebellion of 1920 there was no difficulty, no disturbance, and no turbulence in the whole of South Kurdistan?

Mr. CHURCHILL: I suppose the hon. and gallant Gentleman is anxious to demonstrate that there is some much better political policy to pursue. He will have an opportunity in the Debate on the Colonial Office Vote.

Mr. A. HERBERT: Are not our officers exposed to these constant dangers in Kurdistan simply through the alteration in our policy by the landing of the Greeks in Asia Minor?

Mr. SPEAKER: That cannot be argued now.

Oral Answers to Questions — SUMMER TIME.

Lieut.-Commander KENWORTHY: 24.
asked the Secretary of State for the Home
Department, if it has been decided to curtail the period of summer time for the future; and if he is aware of the dissatisfaction that this would cause among the very large urban populations in the country?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Shortt): As I stated in the course of the Debate on the Second Reading of the Summer Time Bill, the Government are prepared to recommend some reduction of the period proposed in the Bill. That period was originally proposed in order to secure uniformity with France and Belgium, and was longer than the period recommended by the Home Office Committee in 1917. The extent of the reduction will be a matter for discussion in Committee and in the House. I am well aware of the strong feeling in favour of Summer Time which exists in the towns, as I am also aware of the feeling against it which exists in many rural areas.

Lieut.-Commander KENWORTHY: Is the right hon. Gentleman not aware that the overwhelming bulk of the population of this country lives in the large towns?

Mr. SPEAKER: This Bill has gone to a Committee. The matter cannot now be argued.

Oral Answers to Questions — FACTORIES (CHIEF INSPECTOR'S REPORT).

Lord H. CAVENDISH-BENTINCK: 25.
asked the Home Secretary whether he is now in a position to state the date when the Report of His Majesty's Chief Inspector of Factories will be laid before Parliament?

Mr. SHORTT: The Report will be presented to-day.

Lord H. CAVENDISH-BENTINCK: Shall we be able to discuss the Factory Department of the Home Office Vote? Will the right hon. Gentleman put it down?

Mr. SHORTT: I am not sure when the Stationery Office will be able to publish the Report. It is presented to-day.

Lord H. CAVENDISH-BENTINCK: Is it not most unusual to have the Debate on the Home Office Vote before the Report, is in hon. Members' hands?

Mr. SHORTT: It was asked to he put, down in the usual way.

Oral Answers to Questions — BOY LABOUR (SHIPS' BOILERS).

Lord H. CAVENDISH-BENTINCK: 26.
asked the Home Secretary whether, in view of the Ministry of Labour's Report, the Government has caused an inquiry to be made into the conditions of employment of boys in scaling ships' boilers?

Mr. SHORTT: Yes, an inquiry was made, and I would refer the Noble Lord to the answer which I gave to him on this subject on 3rd August last. I regret that no opportunity has been found this Session for dealing with the matter by legislation, but it will not be lost sight of.

Lord H. CAVENDISH-BENTINCK: Cannot the right hon. Gentleman introduce such a very non-contentious Measure during the present Session so as to redeem it from absolute sterility?

Mr. SHORTT: If the Noble Lord had as much correspondence about it as I have he would not say it was non-contentious.

Oral Answers to Questions — POLICE DISCHARGES (RIGHT OF APPEAL).

Sir JAMES REMNANT: 27.
asked the Home Secretary whether any steps have been taken by police authorities to remind members of police forces of their right to appeal to an independent person nominated, by the Secretary of State against the opinion of a police surgeon who may recommend their discharge from the force on medical grounds; and, if not, whether he will instruct police authorities to inform any constable whom it is proposed to retire on a medical certificate of his right of appeal under paragraph 2 of Statutory Rules and Orders No. 1450 made under Section 12 (8) of the Police Pensions Act, 1921?

Mr. SHORTT: In the Metropolitan Police the Rules have been published in Police Orders, and I have no doubt that police authorities generally have taken adequate steps to make the Rules known to members of their forces. If my hon. and gallant Friend has any information to the contrary I shall be glad to consider it.

Sir J. REMNANT: Is it not a fact that complaints are received by men who have been discharged that they did not know of their right of appeal; and, if that be so, will the right hon. Gentleman see that
instructions are given to the various police authorities that the men when they are discharged are notified that they have a right of appeal if they should so wish?

Mr. SHORTT: No, I have not heard of those cases. If I may be told of them, I will go into them.

Oral Answers to Questions — POST OFFICE.

PARIS MAILS.

Mr. GIDEON MURRAY: 31.
asked the Postmaster-General whether he is aware of the inconvenience and loss suffered by that section of the community who have business relations with France, owing to the present postal arrangements, under which letters posted in Paris in the afternoon are not delivered in London until between noon and three in the afternoon of the next day, according to the district; whether he has been in communication with the French Government with the object of remedying this situation; and whether, if it is not possible to re-institute the pre-War mail train, leaving the Gare du Nord at nine o'clock in the evening, it could be arranged that the mails be forwarded via Dieppe and Newhaven by the train leaving St. Lazare at 9.5 p.m. each evening and that, as before the War, a postal box should be attached enabling letters bearing a late fee stamp to be posted up to the actual departure of the train?

Sir DOUGLAS NEWTON: 33.
asked the Postmaster-General whether he will endeavour to make an arrangement with the French Government with a view to providing a more rapid postal service between Paris and London?

Lieut.-Colonel Sir A. BURGOYNE: 34.
asked the Postmaster-General whether he has been in communication with the French postal authorities regarding the acceleration of the postal service by night from Paris to London; and, if so, with what result?

Sir FRANCIS LOWE: 35.
asked the Postmaster-General whether it would be possible for him, in consultation with the postal authorities in France, to arrange for the pre-War service of letters between France and England to be resumed, and, particularly, for letters posted in Paris in the afternoon or evening of one day to leave Paris the same
night, so that they might be delivered in London the next morning; whether this could be brought about either by reinstating the mail train, which used to leave the Gare du Nord at 9 p.m., or by utilising the train which now leaves the Gare St. Lazare for Dieppe at 9.15 p.m.; and whether he realises the serious loss and inconvenience which the present system inflicts upon the business communities in both France and England?

The ASSISTANT POSTMASTER-GENERAL (Mr. Pike Pease): My attention has been drawn to this matter. I have more than once brought the question to the notice of the French Post Office, which is responsible for the arrangements for conveying mails from Paris to this country, and I am assured that that Office is fully alive to the desirability of improving the present service. I am not sanguine of an early return to pre-War arrangements, but I am in hopes that it may be found possible to introduce improvements in the present service which will give an earlier delivery in London generally. The transfer of the mails to the Dieppe-Newhaven route is a question for the consideration of the French Post Office.

INDIAN MAILS.

Lieut.-Commander KENWORTHY: 32.
asked the Postmaster-General how long the mails take to reach India from this country; if he is aware of the great importance to merchants in Great Britain and India of a quick mail service; what steps are being taken to expedite the Indian mail service; and whether the possibilities of quick overland or aerial transport have been considered, and with what result?

Mr. PEASE: The Indian mail is due at Bombay in 14½ days after leaving London. Occasionally it arrives rather later, as the Peninsular and Oriental Steam Navigation Company have not yet been able to replace fully their war losses and to provide a fleet of uniform speed for the service. I am aware of the great importance to commercial interests of a quick mail service to India, and advantage is taken of every opportunity of improving the service. I do not see any prospect of any material acceleration in overland transit. The possibilities of air transport in connection with the Imperial mail services generally are being explored by the Civil Aviation Advisory Board.

Lieut.-Commander KENWORTHY: Is the right hon. Gentleman's Department in constant consultation with the Middle East Department with a view to utilising aircraft, which now fly continuously in that area, with a view to quickening up the mails?

Mr. PEASE: This question is being considered by the Civil Aviation Advisory Board at present.

Lieut.-Commander KENWORTHY: Is the Post Office represented on that?

Mr. PEASE: Yes.

STAMPS (ADVERTISEMENTS).

Lieut.-Colonel MURRAY: 36.
asked the Postmaster-General whether it is proposed that private business concerns shall be permitted to advertise through the medium of Post Office obliterating stamps, or whether the Post Office intends to reserve the obliterating stamp for its own purposes?

Mr. PEASE: For the present it is proposed to restrict advertisements on Post Office date stamps to objects in which the Post Office or other Departments of State are interested.

Lieut.-Colonel MURRAY: Can the right hon. Gentleman give the House an assurance that these stamps will not be used by the Government for the purpose of propaganda?

Mr. PEASE: I think I must have notice of that question.

Oral Answers to Questions — ROYAL AIR FORCE.

Viscount CURZON: 39.
asked the Secretary of State for Air whether he can make any statement or give any figures to show the work actually carried out by the Naval Wing of the Royal Air Force during the past 12 months?

The SECRETARY of STATE for AIR (Captain Guest): Beyond stating that I an satisfied with the progress which has been made in the development of aircraft co-operation with the Navy during the past 12 months, I do not consider that it would be in the public interest to make any detailed statement of the work performed, or to give any figures of the flights carried out.

Viscount CURZON: Is the right hon. Gentleman aware that during the discussion on the Air Force Estimates he failed to give any item of information relating to the work of the Naval Air Service, and a wide impression exists that the power provided by the Air Ministry is not adequate for the work which that service has to do?

Captain GUEST: The "wide impression" is largely created by my Noble Friend. Next year I will do my best to make up for it.

Mr. L. MALONE: 47.
asked the Prime Minister whether, in view of the fact that it is increasingly possible to substitute air forces for naval or military forces and thereby effect considerable economies, he will reconsider his decision and place the Air Minister on a footing in the Cabinet where air propositions will not be overruled by naval and military arguments put forward without a proper consideration of the air side of the question?

The PRIME MINISTER (Mr. Lloyd George): I have nothing to add to my answer of the 22nd June. I do not accept the allegation in the last part of the hon. Member's question.

Oral Answers to Questions — ARGENTINE BEEF (PRICES).

Mr. CAIRNS: 43.
asked the President of the Board of Trade whether he is aware that the rise in the price of Argentine beef since the end of 1921 has been greater than the normal seasonal rise; and, seeing that there is reason to suppose that this rise is due to the operation of the American meat trust does he propose to take any action to safeguard British consumers?

Mr. PARKER: Up to the middle of June the rise in prices of Argentine beef was not much greater than the ordinary seasonal increase. In the third week of June, however, there was a sharp rise in wholesale prices both of Argentine chilled beef and of Scotch beef. My right hon. Friend has no knowledge that meat prices have been manipulated by any particular interest, but he will be grateful if the hon. Member will furnish him with any precise information of such manœuvres.

Oral Answers to Questions — ALCOHOLIC BEVERAGES (EXPORTS).

Commander BELLAIRS: 42.
asked the President of the Board of Trade the sum total values of the exports of alcoholic beverages to the United States of America, Canada, Mexico, and the West Indies, from what was the United Kingdom in 1913 and in 1920?

Mr. PARKER (for Mr. Baldwin): The President of the Board of Trade has asked me to give the reply. The answer involves a statement of figures which, with the approval of the House, my right hon.

Country to which consigned.
United Kingdom produce of manufactures.
Foreign and Colonial merchandise.


1913.
1920.
1913.
1920.



£
£
£
£


United States of America
897,073
135,308
83,035
23,245


Canada
799,453
2,518,304
43,000
129,824


Maxico
8,459
50,763
1,961
5,697


West Indies (British and Foreign)
165,909
622,777
20,031
61,107

Oral Answers to Questions — INTERNATIONAL LABOUR CONVENTIONS, GENEVA.

Mr. G. BARNES: 44 and 58.
asked the Minister of Labour (1) when he will introduce the conventions and recommendations arising out of the last Labour Conference at Geneva for the consideration of the House;
(2) if he is yet in a position to say when he will submit to the House the recommendations and conventions arising out of the last International Labour Conference?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Sir Montague Barlow): The conventions and recommendations of the last International Labour Conference at Geneva in October and November last are at present under the consideration of His Majesty's Government. I am not in a position to make any definite statement at present.

Mr. BARNES: Can I be told whether it will be introduced this Session, having regard to the fact that if it be not, it will be out of date?

Friend will have circulated in the OFFICIAL REPORT.

Following is the answer:

The following statement shows the declared value of alcoholic liquors exported from the United Kingdom, consigned to the undermentioned countries, during the years 1913 and 1920:

(NOTE.—Of the total value of alcoholic liquors of United Kingdom manufacture exported to these countries 71 per cent. in 1913 and 92 per cent. in 1920 are accounted for by British and Irish spirits. The average declared value of those spirits was about 9s. 6d. per gallon in 1913 and 29s. 6d. per gallon in 1920.)

Sir M. BARLOW: That question, which involves Parliamentary time, ought to be addressed to the Leader of the House.

Lord H. CAVENDISH-BENTINCK: Would it not be disgraceful if we did not fulfil our obligations under this Convention?

Sir M. BARLOW: There is no intention not to fulfil our obligations.

Oral Answers to Questions — TRUSTS AND COMBINES.

Commander BELLAIRS: 45.
asked the Prime Minister whether the Standing Committee on Rings, Trusts and Combines, which was officially stated to be investigating for the purpose of promised Government legislation, had a final meeting on 18th May, 1921, and unanimously passed a resolution that this inquiry should not be allowed to lapse; whether he is aware that the Committee served without remuneration, so that it could have continued investigations in spite of the lapse of Section 3 of the Profiteering Act; and whether the whole of the work of the Committee has been made available to the public?

Mr. PARKER: This question has been referred to the President of the Board of Trade. The answer to the first part is in the affirmative. No remuneration was paid to the members of the Committee, but after the expiration of the Profiteering Acts no powers remained under which the production of evidence could be compelled. All the results of the Standing Committee's work have been made available to the public so far as was compatible with the provisions of the Acts regarding confidential evidence.

Commander BELLAIRS: 46.
asked the Prime Minister whether he is aware that it was officially stated on 20th June, 1920, that the reason for the delay in introducing legislation dealing with trusts and combines was that the Committee was still investigating and, on 22nd November, 1920, that the Government proposals would be based upon the recommendations of the Committee appointed in 1918 and which reported in 1919; whether the Government have now come to the end of the period of consideration; and, if so, when the promised Bill will be introduced?

Mr. PARKER: This question also has been referred to the President of the Board of Trade. My right hon. Friend is aware of the statement made on the 22nd November, 1920, but he is unable to identify the first answer referred to. With regard to the last two parts of the question I would refer my hon. and gallant Friend to the answer given to him by the Leader of the House on the 15th February last.

Oral Answers to Questions — MINISTRY OF DEFENCE.

Mr. MALONE: 48.
asked the Prime Minister whether the question of the creation of a Ministry of Defence has yet been considered by the Committee of Imperial Defence; whether a Sub-committee has been appointed to investigate this matter; if so, what is the composition of this Committee; and when is it anticipated that a decision will be arrived at?

The PRIME MINISTER: The question of the creation of a Ministry of Defence has been referred to the Standing Defence Sub-committee of the Committee of Imperial Defence, which will consider it at an early date.

Major-General SEELY: Can the Prime Minister say when that Committee is likely to report?

The PRIME MINISTER: I cannot say at the moment, but I will make inquiries, and let my right hon. Friend know.

Major-General SEELY: I will put down another question.

Oral Answers to Questions — SAFEGUARDING OF INDUSTRIES ACT.

GAS MANTLES.

Mr. KILEY: 53.
asked the Chancellor of the Exchequer if he is now in a position to say what is the amount of duty His Majesty's Board of Customs have decided to impose on imported gas mantles; and will he state whether delivery of gas mantles was being allowed on a deposit of 25 per cent. of the value of the complete mantles?

Sir J. BAIRD: The amount of duty payable in respect of imported gas mantles will vary according to the value of the dutiable ingredients. But as regards 90 per cent. of the importations, it is estimated that the duty involved will not exceed 5 per cent. of the value of the complete article. With regard to the last part of the question, I would point out that my right hon. Friend the Chancellor of the Exchequer informed the hon. Member on the 15th instant that delivery has hitherto been allowed on deposit of a sum equivalent to the duty on a value of 25 per cent. of the value of the complete mantle, not on a deposit of 25 per cent. of the value of the mantle.

Mr. KILEY: Is the hon. Baronet aware that two answers were given, one stating that there was a duty of 25 per cent. on the value of the complete mantle, and the other stating that there was a duty of 25 per cent. on the dutiable part of the mantle? Which is right?

Sir J. BAIRD: I think there is some misunderstanding.

Mr. KILEY: If I send the hon. Member copies of the two answers I have received, and he sees that there is a contradiction, will he have it put right?

Sir J. BAIRD: Provided the hon. Member does not keep on repeating the same
question. This has been answered for the third time.

Colonel NEWMAN: Can the hon. Member tell me whether this duty is imposed under Part I or Part II of the Act?

Sir J. BAIRD: I should like notice of that question.

TOY VIEWSCOPES.

Major M. WOOD: 55.
asked the Chan cellor of the Exchequer whether he is aware that a consignment of toy view-scopes costing 2½d. each has been detained by His Majesty's officers of Customs on the ground that the glass magnifier was a scientifically-worked lens and therefore liable to a duty of 33⅓ per cent. under the Safeguarding of Industries Act; and whether his officers have a standard to work by and instructions to exempt articles of trifling value?

Sir J. BAIRD: I have no information in regard to the particular consignment in question, but I would refer the hon. and gallant Member to the reply given by my right hon. Friend the President of the Board of Trade to the hon. Member for the Western Isles on the 8th ultimo as to the position of view-scopes under the Safeguarding of Industries Act. As regards the last part of the question, Key Industry Duty is now waived on toys and fancy goods where the value of the dutiable parts is shown not to exceed 10 per cent. of the total value of the whole article.

Oral Answers to Questions — VENEREAL DISEASE CLINIC (DEWSBURY).

Mr. MYERS: 61.
asked the Minister of Health if he is aware that following an inspection by his Department of the venereal diseases clinic at Dewsbury, a recommendation has been made by the inspector that an irrigation but should be provided to ensure the service being efficiently carried out; whether, upon receipt of that Report, the, local authority has prepared plans and estimates for the erection of the building, and that his Department decline to admit any part of the cost to be made available for purposes of Government, grant; that the infirmary hoard, upon whose premises the clinic has been established, have inti-
mated that, unless the irrigation but is provided, the treatment of veneral disease upon their institution must terminate; and whether, having regard to the fact that the existing machinery of administration has received the approval of his Department from its inception, he will make the necessary extension available for the grant and allow the work to proceed?

The MINISTER of HEALTH (Sir Alfred Mond): The recommendation made by my Department was that the present facilities for irrigation at this clinic should be improved, but not that a separate but should necessarily be provided. My Department have not refused to admit part of the expenditure for grant. Plans and particulars of the proposed but have been submitted, and are under consideration. Grant will be available in aid of the approved expenditure.

Oral Answers to Questions — IRISH REGIMENTS (DISBANDMENT).

Brigadier-General SURTEES: 14.
asked the Secretary of State for War how many men of the disbanded Irish regiments are entitled to pensions, and what will be the aggregate value of such pensions to officers and men; whether efforts have been made to secure work for them or positions of trust, and if as a condition of granting such pensions they have been asked to take the oath of allegiance, whether steps have been taken to prevent any of them from joining the Irish Republican Army; and if any of them have been invited to join units of the British Army?

The FINANCIAL SECRETARY to the WAR OFFICE (Lieut.-Colonel Stanley): I might explain to my hon. and gallant Friend that the disbandment of these units does not involve the compulsory retirement or discharge of all the individuals composing them. The only officers who will be compulsorily retired prematurely are the officers who are retrenched as surplus to the general requirements of the Army, and the only soldiers who will be compulsorily discharged prematurely are the special short service men who are discharged under the terms of Army Order 181 of last month. Officers and soldiers of these categories will be compulsorily retired and discharged respectively throughout the
Service as a whole, whether the units to which they belong are disbanded or not, and will receive the special compensation authorised by Army Orders 179 and 180. The remaining officers, non-commissioned officers, and men of the disbanded units will be offered the option of continuing in the Service by transfer to other corps, and the non-commissioned officers and men who do not accept such transfer will receive the special compensation authorised by Army Order 180. I cannot at present give the figures asked for in the first and second parts of the question. As regards the third part of the question, steps to assist the retrenched officers to find work are under consideration. The answer to the fourth and fifth parts is in the negative and to the last part in the affirmative.

Oral Answers to Questions — HONOURS LISTS.

Mr. G. LOCKER-LAMPSON: 49.
asked the Prime Minister if he will state how many Departmental lists of names to be recommended for honours are prepared on each of the bi-yearly occasions?

The PRIME MINISTER: As has already been explained, all Departments are asked by me to submit their recommendations for my consideration.

Mr. LOCKER-LAMPSON: Can the right hon. Gentleman say whether, in addition to the Departmental lists, there are any other lists submitted to him?

The PRIME MINISTER: Oh, yes.

Mr. LOCKER-LAMPSON: Can the right hon. Gentleman say who are the people who present the other lists?

The PRIME MINISTER: There are recommendations that come from every quarter. Every Prime Minister gets suggestions of names from every quarter.

Lord H. CAVENDISH-BENTINCK: Who suggested Mr. J. B. Robinson's name? Was it a Departmental suggestion?

Mr. LOCKER-LAMPSON: Can the right hon. Gentleman say whether, in the lists submitted by him, a description of the services performed by these gentlemen is appended to the list?

The PRIME MINISTER: Certainly.

Sir F. BANBURY: As this question is being discussed in the House of Lords, will the right hon. Gentleman say why we cannot discuss it here?

Colonel ASHLEY: Can the right hon. Gentleman say whether, in addition to a description of the services of the gentleman, the amount he has paid is also added?

Colonel GRETTON: Does the right hon. Gentleman receive lists of recommendations by the Patronage Secretary to the Treasury or from any of the Party Whips?

The PRIME MINISTER: Certainly. In that respect I follow the precedent established by other Prime Ministers. I have never departed from precedents in this respect. Recommendations certainly come from the Patronage Secretary.

Sir W. JOYNSON-HICKS: Will the right hon. Gentleman consider the request made by the right hon. Baronet the Member for the City of London (Sir F. Banbury) for a discussion, so that the points that are now being raised in the House of Lords on this and other matters may be discussed in the House of Commons?

Mr. SPEAKER: A question is to be put to me at the end of Questions on that point.

At the end of Questions—

Colonel GRETTON: Mr. Speaker, I desire to submit a point of order for your consideration. The following question has been refused at the Table, as I think you are aware:
To ask the Prime Minister if he can give a definite assurance that no money or other consideration of money value has been paid, or passed either directly or indirectly, in connection with any of the honours recommended by the Prime Minister in announcing the list of honours on the 3rd of June this year.
Might I explain, Sir, before you answer on the point of Order as to the reason why this question has not been allowed to be put, that it has been carefully drafted so as not in any way to infringe or even suggest the infringement of the undoubted and unchallenged Royal prerogative in the bestowal of honours. I should be the last to do so. May I point out also for your consideration that it
is not suggested in the question that any improper inducement has been offered to the Crown in any shape or form in the bestowal of honours. That again is unthinkable and would not on any account be suggested. I would also mention for your consideration that there have been Debates more than once in this House on this very question when a Motion has been put down and there has been a free discussion of recommendations made by the Prime Minister for the time being as to the bestowal of honours, and complaint has been made within the public knowledge that money has been subscribed to party funds in connection with recommendations made for the bestowal of honours. The intention of the question is to ensure that the advice offered to the Crown shall not be in any way influenced by money considerations offered to the Ministers, or for party funds.

Mr. SPEAKER: I think I can best answer the hon. and gallant Member by quoting some of the rulings of my predecessor on this matter. I have gone into them carefully. On 21st February, 1907, a question similar to that of the hon. and gallant Member was tendered. Mr. Speaker Lowther declined to allow it to be put on the Notice Paper, on the ground that the Prime Minister had no responsibility to the House for any advice which he might tender to His Majesty respecting the distribution of honours.
Further, on 11th July, 1907, with regard to another question as to a Peerage then recently announced, Mr. Speaker Lowther said:
A question cannot be asked of the Prime Minister as to his responsibility for any advice he might give to the Sovereign in the recommendation of honours.
Further, on 22nd January, 1908, the same ruling was referred to at Question Time in the House, when an hon. Member asked the Prime Minister, then the right hon Member for Paisley (Mr. Asquith), whether he would give an opportunity for discussing a Motion in the name of a certain hon. Member. The Prime Minister having answered in the negative, a question was put to Mr. Speaker Lowther to the following effect:
Whether it is not the fact that it is the undoubted right of an hon. Member of this House to question the Prime Minister upon the advice given by him to the Sovereign in
his capacity as Prime Minister upon any subject whatever.
Mr. Speaker Lowther then replied:
It rather depends upon what meaning the hon. Member attaches to the word 'question.' If the hon. Member limits it to asking questions at Question time I say 'No.' If he means to extend it to criticism at the proper time, and raised in the proper way, I say 'Yes.' 
Further, on 17th March, 1920, Mr. Speaker Lowther refused to allow the matter to be discussed on the Report of Supply.
I cannot see my way to depart in any respect from these rulings of my predecessor. The hon. and gallant Member will see, I think, that the result of these rulings is that the matter may be raised on a Motion, but cannot be properly raised at Question Time, or in a Debate in Supply.

Colonel GRETTON: May I ask the Prime Minister whether he will give facilities at an early date for discussion of the subject, which is of great public interest.

Colonel ASHLEY: May I put it to you, Mr. Speaker, that the House can raise the question on the Prime Minister's salary? If this House vote a salary to the Prime Minister, surely it should have some control over his actions?

Mr. SPEAKER: That is a question which has often been dealt with by my predecessor, and I think it is covered by two parts of the rulings which I have quoted.

Sir F. BANBURY: I gather that the rulings of your predecessor are confined to questions of Supply, but they do not indicate that a Motion may not be made and a day given for discussion of this matter. In the circumstances, I hope that the Prime Minister will fix a day for debate.

Mr. LOCKER-LAMPSON: Is the Prime Minister aware that there is already a Motion on the Paper, supported by a hundred Members of his own party?

The PRIME MINISTER: I am quite aware of what is on the Paper. With regard to time, I naturally consult those who have been making a forecast of the time at our disposal, and I am afraid that I have to give the same answer as I gave
in reply to a previous request for more time, and that is that the time at our disposal is not merely very limited, but that we have already exceeded our anticipations as to the programme of the Session, and if there is any addition of business at all we shall have to sit very much later into August than we had hoped when we originally sketched our business for the Session. In addition to that, there is the anticipation that an Autumn Session may be necessary in order to deal with the Irish Constitution. All this is on the assumption that nothing new arises to demand the attention of the House. After the Debate yesterday, that is more than anyone would care to predict. It is not impossible—I hope it is not probable, and I sincerely trust it will not be the case—that the House may be called upon to take up some time in discussing the affairs of Ireland in connection with events in that country, perhaps, in the course of the next week or fortnight. In these circumstances it would be quite impossible for the Government to find time for any other Motions that have been demanded in respect to a great many matters and signed by a great many Members.

Lord ROBERT CECIL: In view of the difficulty the right hon. Gentleman has pointed out—no doubt, it is serious—cannot the Government see their way to set up a Committee of Inquiry of the kind, without any discussion? That will save the time of Parliament and will greatly pacify the public mind, which is much excited on this subject.

Lieut.-Colonel J. WARD: Considering that "Hansard" shows that this subject was debated under a Conservative administration, and that similar charges were made in 1886, and again against the Campbell-Bannerman administration and the Asquith administration, and once more is made now, does the right hon. Gentleman not think, as evidently the same principles prevail in all the parties when they are in power, that it is time the House of Commons had another chance of discussing this question?

The PRIME MINISTER: I agree. I have heard at least one or two discussions on the subject in the time of previous administrations, but they were almost invariably under a Motion for which private Members had balloted. It was
open to Members of the House to ballot for an opportunity to discuss this subject. I am by no means ruling out the possibility of discussion of that kind. As far as the Government are concerned, we have no objection in the least to a discussion. All I care for is that the same principles should apply to all administrations. You should not have one set of principles to apply to one administration and another set of principles in order to criticise another administration. Before F came to any decision with regard to an inquiry, I should like to know what the character of the inquiry is and how far it is to extend. It was thought that I had given a flippant answer when I said it was entirely a question of how far back you went. I did not mean in the least the origin of the peerage. What I meant to say was that we have simply followed the precedent of, at any rate, the last 30 or 40 years. [HON. MEMBERS: "Oh, oh!"] Well, if there is a discussion I shall be glad to say so and to prove it. What I want to know is how far back this inquiry is to extend? That is why I gave that answer to the question the other day.

Major-General SEELY: Is not the right hon. Gentleman aware that what the House is concerned with is not what happened in the past but to know whether we cannot in the future get rid of this detestable system?

Sir F. LOWE: Have any new circumstances arisen which call for an inquiry of this kind and the appointment of a Committee? According to the impression left by Members who have asked these questions, it has been the custom almost from time immemorial, for the Prime Minister to recommend certain people to His Majesty for honours. In my experience and recollection it has always been left to the unfettered judgment of the Prime Minister whom he recommends. If any hon. Member has a fault to find with any appointment which has been made it might be quite legitimate to raise that particular question, as it has been raised in another place. It seems to me however that the questions addressed to the right hon. Gentleman in this House were of a most general and undefined character. I think we ought to have something more definite before saying that there should be an inquiry.

Lord R. CECIL: Does not the Prime Minister think that all he has said—assuming it to be absolutely correct, as, of course, I assume it to be—shows the importance of having this subject inquired into, so that the public may really know what are the fixed principles which the right hon. Gentleman says exist in reference to this matter. Does not he think it is really doing a great deal of harm, not only to his Government, but to the whole belief of the country in the purity of public life, when these charges are constantly being made, that no efficient and proper reply should be made?

The PRIME MINISTER: The Noble Lord knows perfectly well that it is not merely recently that this has been said. As my hon. and gallant Friend the Member for Stoke (Lieut.-Colonel J. Ward) pointed out, these charges have been brought against Administrations for the last 40 years, and have been discussed in this House. The principles have been discussed in this House, and the House has repeatedly reaffirmed the present method. If the House wishes to depart from that method, then I agree it is within the competence of the House to make recommendations upon a proper Motion. It was open to the Members of the House to ballot for an opportunity for that purpose earlier in the year, and had there been a universal desire—had there been a desire on the part of the majority of Members—for a discussion upon the subject, it would have been easy for the Government, earlier in the Session, to find time for that purpose; but to ask that we should find time late in the Session, when we are overpressed with work, and when there are possibilities that we may be pressed even further with work—that, I do not think, is fair to those in charge of the business of the House.

Sir F. BANBURY: Does the right hon. Gentleman mean there will be no opportunity until the ballot next year?

Mr. HOLMES: May I ask, Mr. Speaker, whether, if it is the intention of the House to have a discussion on this matter, it will be possible for you to rule that any hon. Member who has already taken an honour, will not take part in the discussion except to explain how he or his predecessor came to have the honour conferred on him?

Mr. SPEAKER: I am afraid that would be a rather severe tax upon the Chair.

Lieut.-Colonel NALL: Is the Prime Minister aware that certain Resolutions passed in another place towards the end of 1917 and accepted by him, have lately been ignored by certain of his advisers, and what steps does he propose to take with these advisers to ensure that these Resolutions are carried out in future?

Colonel GRETTON: If a desire so widely spread as to cover all quarters of the House and a majority of Members of the House is shown to investigate the system, will the Government find time?

The PRIME MINISTER: The House, of course, is the master of its own time and of the Government, and if there be a demand from the House of Commons representing the general sense of the House, of course the Government will find time We want the House of Commons to realise that at this time a certain amount of business has to be gone through, and that they will be adding, not only to the difficulties of the Government, but to their own.

Mr. LOCKER-LAMPSON: Will the Prime Minister consent, supposing 200 Members put down their names? May I have an answer to that question?

Lieut.-Colonel NALL: May I also have an answer to my question? Is the Prime Minister aware that one of the resolutions which he himself accepted from the House of Lords in 1917 was to the effect that the reasons for the award and a detailed statement of the public services of the individual should be published in the "Gazette" in connection with these honours? Is not it a fact that that resolution as to these details being published has been ignored by the Prime Minister's advisers?

The PRIME MINISTER: No, I do not think that is so. I think the reasons have been published.

Captain WEDGWOOD BENN: Is it not a fact that the First Commissioner of Works, speaking for the Government in another place, said that particulars Given had to be withdrawn?

Mr. LOCKER-LAMPSON: A great scandal! They are afraid of an inquiry.

BUSINESS OF THE HOUSE.

Sir D. MACLEAN: I would ask the Prime Minister a question with regard to the business of to-day. He will notice on the Order Paper not only the large number, but also the importance of the new Clauses to the Finance Bill. No doubt the Patronage Secretary to the Treasury will have informed him of the very late hours which the House has sat on this Bill in Committee. In these circumstances, will he not recognise that it would not be fair to press the Committee to finish the whole of the Clauses to-night, and that another day should be given for their consideration?

The PRIME MINISTER: My right hon. Friend the Leader of the House is unfortunately confined to his room owing to a chill. I understand that there was, I will not say an arrangement, but some understanding that the Amendments would be disposed of in three and a half or four days. [HON. MEMBERS: "No!"] The Government are very pressed for time, and, having regard to the programme in front of us, I am afraid that we shall be forced to sit later into August than we had hoped, and there is always the prospect of having an Autumn Session to deal with Ireland, and we are anxious, naturally, to save every day. At the same time, if it is found impossible to get through these Amendments without unduly taxing the time and the energies of the Committee, then I am afraid that another day must be found, in which case I understand that the Bill will be put on the Order Paper for to-morrow. But I earnestly trust that we may get through to-night, because it is for the convenience of Members that we should save time as far as possible.

Sir D. MACLEAN: I regret very much to hear of the indisposition of the Leader of the House, and I hope that he will soon be quite well again. I would press the request that the House should not sit after 12 o'clock to-night. The Chancellor of the Exchequer will agree with me that the discussions, except on one occasion for an hour or two, were directed to serious points, and he is aware that he need not anticipate anything other than the discussion of really serious points to-day.

Sir F. BANBURY: Before the Chancellor of the Exchequer answers, might
I suggest that there is a desire on the part of everybody not to obstruct, but merely to conduct the business in the ordinary way. It is to the advantage of the country that these Clauses should be discussed more or less in the night and not at 3 or 4 o'clock in the morning when Members are asleep and the reporters are asleep also.

The CHANCELLOR of the EXCHEQUER (Sir Robert Horne): I agree with what the right hon. Member for Peebles has said as to the way in which the discussion has been conducted up to now. I cannot complain at all of the way in which the Clauses have been discussed, and I hope that to-day there will be at least equal expedition. At the same time, I think it possible that we may get through a very large amount, if not all, that is on the Order Paper to-day, and I should not myself at this stage be willing to say that we should conclude at 12 o'clock. It is possible that, with a little extension of time, we may be able to conclude all the business to-night.

NATIONAL HEALTH INSURANCE BILL.

Reported, with Amendments, from Standing Committee C.

Report to lie upon the Table, and to be printed.

Minutes of the Proceedings of the Standing Committee to be printed.

Bill, as amended (in the Standing Committee), to be taken into consideration upon Thursday, and to be printed. [Bill 163.]

HARBOURS, DOCKS, AND PIERS (TEMPORARY INCREASE OF CHARGES) BILL.

Reported, with Amendments, from Standing Committee B.

Report to lie upon the Table, and to be printed.

Minutes of the Proceedings of the Standing Committee to be printed.

Bill, as amended (in, the Standing Committee), to be taken into consideration To-morrow, and to be printed, [Bill 162.]

CONSOLIDATION BILLS (SALMON AND FRESHWATER FISHERIES BILL [Lords]).

Report and Special Report from the Joint Committee, in respect of the Salmon and Freshwater Fisheries Bill [Lords] (pending in the Lords), brought up, and read, with Minutes of Evidence.

Report and Special Report to lie upon the Table, and to be printed. [No. 117.]

PROTECTION OF ANIMALS, &c., BILL,

"to consolidate and amend enactments relating to animals, knackers, and knackers' yards, and to make further provision with respect thereto, and with respect to slaughter-houses, and to reenact with Amendments the Captive Birds Shooting (Prohibition) Act, 1921, and to restrict and regulate the training and exhibition and performances of certain animals, and to provide for the registration of certain persons, premises, and places, and to repeal certain enactments, and for purposes connected with the matters aforesaid," presented by Mr. ALFRED DAVIES; supported by Mr. Rhys Davies, Mr. Myers, Mr. Kennedy, and Mr. Wignall; to be read a Second time upon Wednesday, 12th July, and to be printed. [Bill 164.]

MESSAGE FROM THE LORDS.

That they have agreed to,—

Child Murder (Trial) Bill (changed to "Infanticide Bill").

Staffordshire Potteries Water Bill, with Amendments.

Land Drainage Provisional Order (No. 1) Bill, with an Amendment.

Rugby School Bill [Lords], without Amendment.

That they have passed a Bill, intituled, "An Act to make better provision for the prevention of fire in premises where raw celluloid or cinematograph film is stored or used." [Celluloid and Cinematograph Film Bill [Lords.]

LAND DRAINAGE PROVISIONAL ORDER (No. 1) BILL.

Lords Amendment to be considered To-morrow.

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE B.

Sir SAMUEL ROBERTS reported from the Committee of Selection; That they had discharged the following Member from Standing Committee B: Mr. Townley; and had appointed in substitution: Lieut.-Colonel Arthur Murray.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee B (added in respect of the Summer Time Bill [Lords]) Mr. William Thorne; and had appointed in substitution: Mr. Charles Edwards.

STANDING COMMITTEE C.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee C: Major Breese; and had appointed in substitution: Mr. Townley.

Sir SAMUEL ROBERTS further reported from the Committee; That they had added the following Member to Standing Committee C (during the consideration of the Electricity Supply Bill [Lords]): Sir Leslie Scott.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Members from Standing Committee C: Mr. Trevelyan Thomson and Major Mackenzie Wood; and had appointed in substitution (during the consideration of the Electricity Supply Bill [Lords]): Mr. Holmes and Mr. MacVeagh.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee C (added in respect of the Allotments Bill [Lords]): Mr. Evan Davies; and had appointed in substitution: Mr. Walter Halls.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee C (added in respect of the Naval Discipline Bill [Lords] and the Wireless Telegraphy and Signalling Bill): Rear-Admiral Adair; and had appointed in substitution; Vice-Admiral Sir Reginald Hall.

SCOTTISH STANDING COMMITTEE.

Sir SAMUEL ROBERTS further reported from the Committee; That they had added the following Member to the Standing Committee on Scottish Bills: Mr. Guthrie.

Reports to lie upon the Table.

Orders of the Day — FINANCE BILL.

Considered in Committee. [Fourth Day.]

[Mr. JAMES HOPE in the Chair.]

NEW CLAUSE.—(Super-tax on undistributed income of certain companies.)

(1) Where it appears to the Special Commissioners that any company to which this Section applies has not, within a reasonable time after the end of any year or other period ending on any date subsequent to the fifth day of April, nineteen hundred and twenty-one, for which accounts have been made up, distributed to its members in such manner as to render the amount distributed liable to be included in the statements to be made by the members of the company of their total income for the purposes of Super-tax, a reasonable part of its actual income from all sources for the said year or other period, the Commissioners may, by notice in writing to the company, direct that for purposes of assessment to Super-tax, the said income of the company shall, for the year or other period specified in the notice, be deemed to be the income of the members, and the amount thereof shall be apportioned among the members:

Provided that, in determining whether any company has or has not distributed a reasonable part of its income as aforesaid, the Commissioners shall have regard not only to the current requirements of the company's business but also to such other requirements as may be necessary for the maintenance and development of that business.

(2) Any Super-tax chargeable under this Section in respect of the amount of the income of the company apportioned to any member of the company shall be assessed upon that member in the name of the company, and, subject as hereinafter provided, shall he payable by the Company, and all the provisions of the Income Tax Acts and any Regulations made thereunder relating to Super-tax assessments and the collection and recovery of Super-tax shall, with any necessary modification, apply to Super-tax assessments and to the collection and recovery of Super-tax charged under this Section.

(3) A notice of charge to Super-tax under this Section shall in the first instance be served on the member of the company on whom the tax is assessed, and if that member does not within twenty-eight days from the date of the notice elect to pay the tax a notice of charge shall be served on the company and the tax shall thereupon become payable by the company:

Provided that nothing in this Sub-section shall prejudice the right to recover from the company the Super-tax charged in respect of any member who has elected as aforesaid but who fails to pay the tax by the first day
of January in the year of assessment or within twenty-eight days of the date on which he so elected, whichever is later.

(4) Any undistributed income which has been assessed and charged to Super-tax under this Section shall when subsequently distributed be deemed not to form part of the total income from all sources for the purposes of Super-tax of any individual entitled thereto.

Where a member of a company has been assessed to and has paid Super-tax otherwise than under this Section in respect of any income which has also been assessed and upon which Super-tax has been paid under this Section, he shall, on proof to the satisfaction of the Special Commissioners of the double assessment, be entitled to repayment of so much of the Super-tax so paid by him as was attributable to the inclusion in his total income from all sources of the first-mentioned income.

(5) This Section shall apply to any company—

(a) which has since the fifth day of April, nineteen hundred and nine, been registered under the Companies Acts, 1908 to 1917; and
(b) in which the number of shareholders computed as hereinafter provided is not more than 50; and
(c) which has not issued any of its shares as a result of a public invitation to subscribe for shares; and
(d) which is under the control of not more than five persons,

For the purposes of this Sub-section—
In computing the number of shareholders of a company there shall be excluded any shareholder who is not a beneficial owner of shares or who is an employé of the company, or is the wife or the unmarried infant child of a beneficial owner of shares in the company;
A company shall be deemed to he under the control of any persons where the majority of the voting power or shares is in the hands of those persons or relatives or nominees of those persons, or where the control is by any other means whatever in the hands of those persons;
The expression "relative" means a husband or wife, ancestor, or lineal descendant, brother, or sister;
The expression "nominee" means a person who exercises his voting power or holds shares directly or indirectly on behalf of another person;
Persons in partnership and persons interested in the estate of a deceased person or in property held on a trust shall, respectively, be deemed to be a single person.

(6) In this Section the expression "member" shall include any person having a share or interest in the capital or profits or income of a company, and the expression "employé" shall not include any governing director, managing director, or director.

(7) The provisions contained in the First Schedule to this Act shall have effect as to
the computation of the actual income from all sources of the company, the apportionment thereof amongst members of the company, and otherwise for the purpose of carrying into effect, and in connection with, this Section.

(8) The provisions of this Section shall apply for the purposes of assessment to Super-tax for the year 1922–23 and any succeeding year of assessment.—[Sir R. Horne.]

Brought up, and read the First time.

The CHANCELLOR of the EXCHEQUER (Sir Robert Horne): I beg to Move, "That the Clause be read a Second time."
4.0 P.M.
During previous discussion I promised the Committee to put down an amended form of the proposals which were put forward in Clause 14. The Committee will remember that that Clause dealt with the case of what I may describe, not very accurately but sufficiently accurately to indicate to the Committee the idea which lies behind it, as the case of the one-man company. It was perfectly obvious that every Member of the Committee was in agreement with the general principle which I was seeking to establish. It is a fact that there have been started and are increasingly promulgated, companies whose chief result is to evade the payment of Super-tax by enabling small numbers of people to put to reserve, sums which should be Super-taxed, but which by reason of our present Company Law can thus evade the ambit of the Super-tax net. That was the foundation of the Clause. Many objections were taken in the course of the discussion, and I recognised the cogency and force of some of the apprehensions which undoubtedly were agitating the mind of Members of the Committee. Accordingly, I asked leave of the Committee to put down a new form of the Clause which might have the effect of meeting some of the difficulties. This new Clause is now on the Paper, and I should like to tell the Committee very briefly the results of the modification. In the first place, the phraseology of the first Clause was objected to on the ground that what we there described as "normal requirements of the business" might lead a company not to apply to reserve sums which might quite properly be used for that purpose. I recognised, of course, the force of that criticism, and I
have struck out the words "normal requirements" altogether, and I now provide that a company shall only become subject to the provisions of this Clause if it fails to distribute a reason able part of its actual income from all sources for the year or period, after having regard to all the requirements of the business from whatever point of view you look at it. The Committee will find the words:
That, in determining whether any company has or has not distributed a reasonable part of its income as aforesaid, the Commissioners shall have regard not only to the current requirements of the company's business but also to such other requirements as may be necessary for the maintenance and development of that business.
I have put in no adjectives at all describing the requirements, and I think probably that will alleviate the difficulty felt by some hon. Members. Accordingly, it would be open to those who have to come to a judgment upon the matter to look at all the requirements which the business may have—not merely to current requirements, but everything that is necessary for the maintenance and development of the business. These words are wide enough to cover everything that a business may require. I notice that in some of the Amendments which have been put down to this Clause an attempt has been made to enumerate the kind of things for which companies might ordinarily require to set aside reserves. In the interests of the companies themselves. I would venture to deprecate any such enumeration. As a lawyer, I am very well aware that as soon as you begin to enumerate things, you exclude everything else that you do not enumerate. It is very much better to leave your provisions in wide terms if you wish to aid the companies rather than to set forth a schedule of things to which you are having special regard. If you make your enumeration, the maxim of the law immediately applies that the statement of one thing excludes the other. Therefore, I have put this Clause in as wide terms as I possibly can in order to allay apprehensions which anyone may feel that they will not be allowed consideration in the widest form of all the circumstances against which a company may have to provide in its discretion.
It was said in the course of the Debate that there are something like 66,000
private companies in this country operating under our Company Law, and apprehension was felt that there would be an attempt at scrutiny of all these companies. I may say, quite candidly, that no such intention ever occurred to our minds. Of course, the only intention was to get at the companies which were operating so as to defeat our Super-tax Law, and the kind of idea in our heads was that the number of companies, which at the moment one would desire to investigate, was confined to a very few hundreds out of the 66,000 companies which are registered under the Company Law. The Super-tax only began in this country in 1909, and though there may have been some inducement, at any rate, there was no such great inducement prior to 1909, as was created by the Super-tax Law of that year. Accordingly, I propose that this Clause shall apply to any company which has been registered since 5th April, 1909, under the Companies Acts, 1908 to 1917. I am told that takes out of the provisions of the Clause at least 25,000 companies, which were registered prior to that day. My information is that, of the remainder, at least 30 per cent. are small companies, with a total income of not more than £1,000 per year and which, accordingly, do not come within the ambit of these provisions. Therefore, the number of companies which could become by any possibility the subject of investigation would be very greatly restricted and limited by the proposal which I now make. There is a further restriction, which is designed to meet one of the Amendments, which was proposed, I think, by two hon. Members from Glasgow. It is that the Clause can only apply to companies which are under the control of not more than five persons. The proposal made by the hon. Members for Glasgow was, I think, four persons. I suggest the number of five as being more suitable.
I hope the Committee will see that I have been endeavouring to the utmost of my ability to meet the points which have been put and to design a Clause which will at least show that we are desirous of excluding from any troublesome investigations the great mass of the companies in this country and to strike at only those which are engaged in devices to escape the operation of the Super-tax. I have only one more remark to make,
and it is in connection with an Amendment suggested by the hon. Member for North-East Derbyshire (Mr. Holmes). His Amendment was designed to put upon the auditor of the company the duty of saving investigation in cases where he could give a certificate that in his opinion the company's method of distribution of its proceeds was entirely justified and provided an appeal on the part of the Inland Revenue to the Board of Referees. The Committee will remember that I indicated some willingness to introduce some such principle into the Clause. There was, however, quite evident opposition on the part of various Members sitting on both sides, and I have since discussed the matter with several people very intimately acquainted with company business and also with the auditing of company accounts. For the moment' I have arrived at the conclusion that it may be quite possible to work this matter satisfactorily without any such provision, but, of course, in the event of the Committee holding the opinion that some such precaution would be an added advantage, I am perfectly willing to reconsider the matter.

Mr. DENNIS HERBERT: I should like, first of all, to thank the Chancellor of the Exchequer for the very kind and courteous attention which he has given to the representations made to him with regard to the original Clause. The original Clause met with rather devastating cross fire from two totally different points of view. It was objected to because it was calculated to be unfair to a number of trading companies which it was not the right hon. Gentleman's intention to hamper or to unduly interfere with. He has met those criticisms to a considerable extent. Then the Clause was met on the other side with the objection that it was not likely to effect its purpose to any considerable extent because there were two perfectly easy ways in which the particular person sought to be caught by the Clause could evade it. He could either reconstruct his company abroad, or he could make such arrangements as would make it a company not of a private character, and by either of those means he could entirely escape from the Clause. The Chancellor of the Exchequer has not met that objection in the least. Indeed, he has been unable to do so because he is bound by his Ways and Means Resolution, which confines the Clause entirely to com-
panies registered in England and companies which being registered in England are of a private character. The right hon. Gentleman no doubt will say that, if he goes on with what I should describe as this ineffective Clause, he will capture a certain number of these people who, either through ignorance or carelessness, will not take the trouble or go to the expense necessary in order to get out of this Clause. That may be perfectly true, and that might be a good argument for going on with the Clause provided that it was not calculated to do harm otherwise. But, much as the right hon. Gentleman has tried to meet the other points raised against this Clause, he has not met some which will undoubtedly hamper a great many concerns which ought not to be hampered and which ought not to have this tax imposed upon them.
In all legislation of this kind there may be hard cases, and, if the Chancellor of the Exchequer were going to catch a large number of those people whom we want to catch, then there would be justification for his Clause, notwithstanding the fact that it might create two or three hard cases, but if you are going to do very little indeed to stop the hole in the net, I seriously suggest that it is not right to proceed with the Clause when there is the danger of doing harm. I go further than that, and I say that it is my very carefully considered opinion that this Clause, if passed, will do more harm to the Chancellor as tax collector than if he lets it alone, and my chief reason for saying that is that a very large number of people at any rate will take advantage of the opportunity which is open to them of getting out of this Clause by reconstructing their companies abroad. The effect of that would not merely be to get out of the Super-tax which this Clause is intended to fix upon them, but by doing so they will also, in nine cases out of ten, get out of paying Income Tax on their profits, which they do pay at the present time. I ask the Chancellor of the Exchequer to pay very serious attention to that indeed. He knows that a foreign company naturally does not pay British Income Tax. It is true that the shareholder in the foreign company, if he is a British subject and liable to tax, pays Income Tax on the dividends which he receives, but the whole essence of these companies is that
they are not paying dividends, but keeping their profits and accumulating them in order to avoid Super-tax, and to the extent to which they do that and refrain from distributing among their members the profits which they earn, those profits which they refrain from distributing will not bear Income Tax. That is such a very big question indeed that, in my opinion, the Income Tax which the Chancellor will lose from the companies which are reconstructed abroad will probably be far more than the Super-tax which he will recover from those comparatively few people who will not take the advantage of evading this Clause by registering their companies abroad.
I do not want at this stage to go into criticisms of the Chancellor's new Clause in so far as he has endeavoured to meet the cases of the companies whom he does not want to hit; I shall have something to say about that on later Amendments to this Clause, if the right hon. Gentleman persists with it, but it seems to me that all I have got to prove for the purposes of my case now is that there is some chance of some companies being ill-treated under this Clause. If that be so, that takes away the justification for this Clause, unless the Clause is going to be thoroughly effective. When you add to the fact that the Clause is not going to be very effective the fact that it is probably going to lose a very large amount of Income Tax, I suggest that there is a very strong case indeed for asking the Chancellor to abandon this Clause altogether.
In conclusion, I would like to say that I have every sympathy with the right hon. Gentleman's attempts to tax those people who are improperly trying to avoid Super-tax. I do not want anyone to attach too much importance to my use of the word "improperly," because it is admitted by everybody, I think, that a man is entitled to get out of paying tax if he can do so without fraud or dishonesty, and it is the Chancellor's duty to try and stop his getting out of it, but I want to say that where you are going to try to stop those people from improperly getting out of Super-tax, we feel that an attempt which is likely to do more harm than good by loss of Income Tax should be abandoned until such time as legislation can be introduced which will
be effective. In my opinion, for what it is worth, it is possible to legislate in such a way as to recover this Super-tax from these men, notwithstanding the fact that they register their companies abroad. That is a subject for discussion at the proper time. I know there are certain difficulties in the way, but I believe, myself, that it can be done, and I put down a roughly drafted Amendment originally to this Clause in order to indicate very shortly the way in which I thought it could be done. The objection to that, as I have already stated, is that the right hon. Gentleman and the Committee are precluded by the Ways and Means Resolution from moving a Clause which will hit foreign companies. I am not very well up in the Rules of this Committee or this House, but I believe I am right in saying that the right hon. Gentleman can recommit this Bill for this particular Clause and get a new Ways and Means Resolution, which would not confine him to dealing only with English companies, and only with companies of a private character. If he would do that, I can assure him that I, for one, and a great many who think with me, would do our best to support him in a Clause which would be effective against those whom he does want to reach, and which would be calculated to do as little damage as possible to the honest trading concerns. I should like to move that this Clause be read a Second time on this day six months.

The CHAIRMAN: That is not the custom with new Clauses.

Mr. A. M. SAMUEL: I do not think there is much chance of people registering their companies abroad, and, if they do, they will be taxed by foreign countries very seriously; besides, their doing so will be perfectly good evidence that they wish to avoid paying their proper share of the taxation of the country, and I should support the Chancellor of the Exchequer if he brought in legislation to withdraw the protection of the British flag from companies trying to do that sort of thing. I am able to say that I and those who think with me agree to accept this Clause, as we could not get the Chancellor to agree to the words put down in my Amendment last week. We think it is a great advance upon the other Clause. The other Clause was unworkable, but we support this
Clause in detail, subject to such verbiage as we shall put forward to make it clearer.

Major Sir GEORGE HAMILTON: The hon. Member says, "I and those who agree with me." Does he mean the Chambers of Commerce?

Mr. SAMUEL: I have the honour of identifying myself in this matter with the Association of British Chambers of Commerce. We have had many consultations about this, as I said last week. We admit the principle involved in the Clause, and we now agree to accept it, subject to certain modifications, but there is something in the Clause which I do not think the Chancellor of the Exchequer has quite realised. I may be wrong; technicalities of the scheme puzzle my poor brain very much, and it is difficult to put my thoughts into words, but there is an element in this Clause which may make it a penalty against a man who has not at the original declaration brought out his profits at such a sum as will satisfy the Super-tax Commissioners. Whereupon the Super-tax Commissioners will say that the amount that he ought to call distributable is so much. They must do this, however, under the Income Tax Acts, and if they assess the amount distributable according to the Income Tax Acts, and not under this Clause, he will find they will have to apply rules of the Income Tax Acts which will not allow certain benefits which this Clause does allow. The consequence is, to apply the old tag,
The little more, and how much it is; The little less, and what worlds away.
The Super-tax Commissioners may say, "We will not take your figure; we will rip your figure up, although the difference may be small, and we will apply the only test to your accounts which we can apply, namely, the Income Tax Acts," and they will not allow the benefits which this Clause otherwise will allow. Yet the shortage in the original declaration may be a relatively small sum. The consequence is that, by having the amount assessed under the Income Tax Acts and according to the views of the Super-tax Commissioners, Super-tax will be payable on reserves, whereas another company operating and declaring its distributable profits under this Clause, having declared a figure which is just within what the Super-tax people think
proper, will be put in a better position than the company which has had its accounts contested by the Commissioners and settled by them under the Income Tax Acts. I am not a lawyer, and not even an accountant, so with an intricate point like this I have great difficulty in putting what I mean into clear language. I have therefore drawn up a minute of what I want to express, and I will hand it to the Chancellor when I sit down. There is another point in the Clause, and that is this, that if a company is to be charged Super-tax, for reasons which we agree, why should it pay Corporation Profits Tax as well? There must be a hiatus in the Clause in not providing for a suitable rebate for Corporation Tax. I think the Chancellor of the Exchequer will say, when he comes to explain the Clause in detail, "Yes, I think if a company under Clause 14 pays Super-tax and is called upon to pay Corporation Profits Tax, which it must do already, I will give it credit in account for the amount of Corporation Profits Tax off the amount of Super-tax."

Sir R. HORNE: I am quite prepared to meet that.

Mr. SAMUEL: I am very much obliged. That does away with a great objection, and that will allay fears of what we otherwise would regard as unjustifiable treatment.

Sir R. HORNE: I am quite prepared to exempt companies under this Clause from the payment of Corporation Profits Tax.

Mr. SAMUEL: I am very much obliged. The word "members" is used very often in this Clause, and I do not know what the Chancellor of the Exchequer means by the word. I have nothing to do with these private limited liability companies in my own private capacity, but it has recently come to my knowledge that a private limited liability company issuing shares has issued the bulk of its shares to another private limited liability company, a holding company. Suppose the first-named company issues shares only to one or two, or three members, and one of them is a limited liability company, how are you going to get the Super-tax out of the limited liability company which holds shares in the original company? Therefore, there is a flaw in this Clause which the Chancellor of the Exchequer will have
to look into. Let me construct a case to show what I mean. Suppose a limited liability company pays its dividends, large or small, to another limited liability company, which may be owned by one, two, or three people only, and suppose then the Super-tax people assess the second company under this Clause, they cannot get the money out of the second company because it is against the law of this country to put Super-tax on limited liability companies. I think the right hon. Gentleman will have to look into this matter pretty closely, otherwise the whole Clause can be defeated quite easily. Then suppose a member of one of these companies under this Clause is a man who has never been liable to Super-tax, and you assess an amount to him. How are you going to get from the man his proportion of the company's Super-tax for which he is liable, and at what rate are you going to assess him? And, if you get it, by what means if his total income is below the super-tax limit can he reclaim it from the Revenue?
If there are various members of a company, and each in his individual capacity is to be charged Super-tax, is each to go to the secretary of the company, disclose his various actual income and say, "You must charge Super-tax at that rate"? Does the Chancellor of the Exchequer mean that? I do not think he does, at least it is wrong if he does so intend. He has, therefore, to explain to us at what rate the Super-tax is to be taken from the company or from the various members of a limited liability company who may hold shares in such private company; otherwise we shall, when tax is collectable, be in a maddening state of confusion, the very thing which infuriates the trading community about revenue legislation. Then the right hon. Gentleman uses the word "income" instead of "profits." There is a great difference between the word "income" and the word "profits." If he means income to mean net profits, I am with him; but, unless he is willing to admit that interpretation, what will be the result? Let me take the first instance that comes to my mind. There is a trust company, for example, called the British Investment Trust and another called the International Investment Trust. They do not come under this Bill, but they hold large volumes of capital invested which brings in income. They have accountants, lawyers, directors, secretaries, offices and
other necessary things to pay for out of that income before it becomes net profit. They have to take these working expenses out of income before getting at the net profit, but, under this Clause, you are defining such income as net profits, and we cannot allow that to stand. Why has the change been made in respect to these words in the new Clause? What is behind it?
Then, again, I notice there are elements in this Clause which are of a retrospective nature. My right hon. Friend the Member for the City of London (Sir F. Banbury) will back me up in saying that the Government ought to make every sacrifice to prevent every element of retrospective legislation being brought in. The Clause refers to 1921, instead of 1922. No doubt the Chancellor of the Exchequer will say that the reason for this is that he wants to get next year the revenue of the last year, because Super-tax is the revenue for the back year. This Clause, I submit, is not constructed for the purpose of revenue, but for the purpose of deterring people from trying to get through a gap in the Income Tax law. The right hon. Gentleman is not out for revenue in this particular Clause, but to deter people from doing things he does not want them to do. I think he ought to insert 1922 in place of 1921, although he might lose revenue thereby.
Look at the difficulty to a private company in having to re-open its accounts of a year or 18 months ago. When it closed its accounts, it made certain allocations and certain disbursements. Is it to go back to all those? It would he a bewildering and almost an impossible task. It must be made, too, perfectly clear that none of the undivided profits prior to 1921 or 1922, if 1922 is to be the date, should be brought under the purview of this Bill for this reason. If you bring up undivided balances in the past years, you make a differentiation between two sorts of companies. This Clause, therefore, should not apply to any reserves or brought forward balances in the accounts prior to 1921 or 1922, if you accept 1922. If the right hon. Gentleman does not accept that, what happens? Some companies who have been prudent, and kept money in their balance sheets, or at the bank, and have not made over-generous allo-
cations to their shareholders in the form of bonus shares, will be penalised, as compared with the companies who dispersed their funds prior to 1921 or 1922 in the form of bonus shares. Therefore, you have given a preference to those companies who have been imprudent and not reserved money for the purposes of development, and you have penalised those who have not issued bonus shares, but have kept their money for development and have been conservative in their finance and profit distributions—the secret of stability in business. There is another side of the question. I think the revenue authorities generally on broad principle are wrong in trying in any way to throw cold water on the setting up of private companies throughout the country, and for two reasons. When you have firms turned into companies, the value of the goodwill and future prospects of the company are often reflected in the value of the shares when a man dies and his estate becomes taxable. The Revenue then benefits. That is not so often the case when a business is a private firm. In the case of a company with a balance sheet, you can go moreover very much closer into the amount of income for Income Tax. Certain books have to be kept, and it is to the advantage of the Revenue to get into closer contact with a company for the purpose of getting revenue.
There is another small point. I see that the Chancellor of the Exchequer has put the date at 1909. It would have been better to have put it at 1914. Still this 1909 does rule out a large number of innocent companies who might otherwise have a grievance against the Government for introducing this Clause. There is a risk of companies registered in and after 1909 labouring under restrictions imposed under this Bill as regards reserve policy which are not imposed on pre-1909 companies. There is a risk that they may suffer unfair competition at the hands of pre-1909 companies. I would rather have seen 1914 in the Bill. I do not think many companies were formed before 1914, for the purpose of escaping super-taxation, and if the Chancellor of the Exchequer were to put that limit up to 1914, very likely he would be able to relieve many of the earlier companies from what will otherwise be an unfair form of competition against them. But there is always the chance that a decaying
pre-1909 company may be brought up and converted for purposes of escaping Super-tax in 1922 by other persons. The right hon. Gentleman must not lose sight of the fact that this Clause has not been constructed by him for the purpose of raking in revenue from the past. I think what he has in mind is that it should be a deterrent, or, rather, should stop a gap in the revenue by preventing people from being placed in a position in which they would be immune from taxation. Subject to certain verbal alterations, which I may have the opportunity of moving later, I am glad to say that I support the principle of this Clause, and that I shall do all I can to work it, but so as not to injure the innocent trader. I am much obliged to the Chancellor of the Exchequer for having met us on the question of the rebate for Corporation Profits Tax as a set off under the Clause when Super-tax is payable.

Sir W. JOYNSON-HICKS: I do not propose to discuss the details of the Clause, but I do want to put one or two Second Reading points to the Chancellor of the Exchequer. I am not at all sure, that in trying to catch the tax-dodger, in which we are all considerably with him, he is not going to do a lot of harm to the trading and banking world of the City of London. The object appears to be that where a one-man company—and we all know that such cases have been reported in the Law Courts—rolls up all the profits, and then borrows the reserve fund profits, and never pays them back, he ought, I agree, to be made to pay Super-tax on those profits. It is a clear fraud. There is also the case where a one-man company rolls up all reserve profits, dissolves the company, and takes those reserve profits out as capital and pays no Super-tax. Those are the only two cases that really need to be dealt with under this Clause.

Sir F. BANBURY: There are others.

Sir W. JOYNSON-HICKS: My right hon. Friend has greater experience of the iniquities of the City than I have.

Sir F. BANBURY: It is nothing whatever to do with the City. They were cases which came before me when I was on the Select Committee for New Issues at the beginning of the War.

Sir W. JOYNSON-HICKS: I was only chaffing my right hon. Friend, as he knows perfectly well. If there are cases in the nature of fraud, we all want to provide the Chancellor of the Exchequer with the means of dealing with them, but in this Clause I want to be sure that he is not hitting a great many public as well as private companies. There is nothing in the Clause limiting it to companies registered as private companies, but it is restricted to companies in which the number of shareholders is not more than 50, and which are under the control of not more than five persons. There will be hundreds, if not thousands, of companies registered as public companies which really are in effect private companies. I wilt give two instances. My right hon. Friend knows that during the War there was an enormous reinsurance business done between England and Germany. Those German insurance companies were put out of action during the War, and what happened? A very large number of re-insurance companies were founded in England with English capital, by English people, by English insurance companies, with very great benefit to the insurance market of the City of London. Most of those were registered as public companies, but certainly a great many had less than 50 shareholders. Two or three large insurance companies get together and say, "It is desirable to found a new insurance company. We will each put down a few thousand pounds, and a few directors a few thousands pounds more." By that means there will be formed a re-insurance company of very great advantage, enabling London to remain the re-insurance market of the world. There are several companies of that kind, every one of which would come under the effect of this Clause.

Sir R. HORNE: Is my hon. Friend referring to public companies?

Sir W. JOYNSON-HICKS: Public and private companies.

Sir R. HORNE: My hon. Friend did not specifically indicate whether it was a public or private company. The fact is that a private company has usually less than 50 members. [HON. MEMBERS: "No!"] On the other hand, you might have a public company with less than 50 members, but it is governed by special
rules. It must publish a balance sheet, which a private company need not do. My hon. Friend has said nothing to indicate that it was really a public company to which he was referring.

Sir W. JOYNSON-HICKS: The right hon. Gentleman will forgive me for saying he is wrong. A private company need not issue shares to the public. That is perfectly true. A public company is one—I have registered scores and scores—which is registered with seven shareholders, and a private company is one which is registered with not less than two shareholders. There is no need for a public company to publish any prospectus or to issue any shares to the public at large. I think the hon. and learned Gentleman the Solicitor-General will agree with that. These re-assurance companies, whether registered as public or private companies, equally come under the operation of the right hon. Gentleman's new Clause. That is perfectly clear. Let me say what is an absolutely essential thing for the re-insurance companies to do—whether a public or a private company does not matter—and that is to build up its reserve. That is the thing it must do first. These re-insurance companies, which have been advantageous to the City of London, have none of them paid any large dividends, but generally very small dividends. They have had, necessarily, in order to carry out the big insurance operations of the world, been compelled to make large reserve funds. These reserve funds will never be distributed to the members, for re-insurance companies do not distribute their reserve funds to their members. They will, of course, increase as the years go on, their value by the investment of these funds and the dividends which are paid to the members will be so far increased, and on these dividends both Income Tax and Super-tax will be paid. But, as I say, it is perfectly clear that these companies will come within the purview of this Clause.

The SOLICITOR - GENERAL (Sir Leslie Scott): Would the setting aside of profits for the purpose of reserve funds by the re-insurance companies to which the right hon. Baronet is referring come within the purview of the words
Such other requirements as may be necessary for the maintenance and development of that business.

Sir W. JOYNSON-HICKS: In my opinion, yes, but the Super-tax Commissioners might not take that view. I am referring, of course, to companies managed by the most astute and upright business men in the City of London. I am not referring to rubbishy companies, but to perfectly bonâ fide companies, who say: "We think it is necessary for the prosperity and stability of our company to build up this reserve fund." The Special Commissioners come along and, under this Clause, they have the right to hold this Star Chamber inquiry—there is no doubt about it. The point is that you have no control of this new inquisition into these bonâ fide companies. Let me give one instance of a company which is well known. Just before or during the War many of our banks instituted foreign banking establishments—Lloyds, I think, and the London and Westminster Bank, among others—with a view to doing foreign banking business. I think it will be found that these foreign banking companies will also come under the provisions of this Clause. These foreign branches were formed with very few shareholders and some of the managers, it might be, from the parent bank, not only to increase banking facilities and for the benefit of our banking institutions, but for the benefit of the commerce of the country. They are now to come under the provisions of this Clause. I quite agree that the tax dodger should come under this Clause, but I submit that in this inquisition the Special Commissioners will have a right to say, "We do not think that you "—it might be Lloyds Bank or it might he the London and Westminster Bank—" are allocating your net profits properly. You are putting too much to reserve. We think you ought to have distributed something more by way of dividend to your shareholders"—chiefly, it might be, that they might get Super-tax. I apologise to my right hon. Friend for putting these points now. I had not the opportunity before. But I should suggest that between now and Report he should consider whether he cannot remodel the Clause so as to catch the defaulter—for we all agree with that—while, at the same time, dealing properly with the great financial institutions of the City.

Mr. HOLMES: I support the particular point at which the Chancellor is aiming,
namely, getting the man who has deliberately formed a private limited company—and we all agree with this, for we all want the Chancellor to get hold of that man—for the purpose of endeavouring to escape Super-tax, and also evading Income Tax. At the same time it is most desirable that trading companies should not be particularly hampered in their operations by having a tax beyond their fair share as Super-tax. I tried to put down an Amendment last week to meet the case by inserting words to the effect that the Clause should not apply to a company carried on for bonâ fide trading purposes. The Chancellor in reply to me said:
Take the next suggestion which has been made as an alternative, that we should insert words to apply it only to companies, a company formed or carried on for bonâ fide trade purposes. That can be evaded in the easiest fashion possible. Take the case of a man carrying on business by private limited company. He carries on the business that he previously carried on, but he would evade it entirely because ho would say, 'I am carrying on a bonâ fide trading business,' and, of course, it would be so"—[OFFICIAL REPORT, 20th June, 1922; col. 1233, Vol. 155.]
This is what I take the Chancellor of the Exchequer to mean—that the man carrying on business would retain his investments in the business and not distribute them, and so he would evade the Super-tax on any yield from the investment, which in the ordinary way would be transferred to his own name outside his company. I want to point out one thing. The concessions which the right hon. Gentleman has made is going to be a further opportunity for the tax dodgers to evade Super-tax. An hon. Member referred to two ways in which the tax dodger could do this: The first was by registering his company abroad, and the second by forming a public company. The Chancellor of the Exchequer to-day by his new Clause is providing a new way. He has told them he has exempted all companies registered before 5th April, 1909. By the new Clause the companies registered before 1909 are outside the operations of this Clause.

Mr. G. BALFOUR: No.

Mr. HOLMES: I believe the Chancellor of the Exchequer told us there were about 25,000 companies registered before 5th April, 1909, which tax-dodgers can endeavour to buy, and a man of this description has only to place his invest-
ment in such a company and carry on as before.

Mr. BALFOUR: Is it not a fact that the hon. Member is confusing registration with incorporation? I think he will find if he looks at the Companies Acts, 1908 to 1917, that companies registered prior to 1909 are automatically re-registered. I refer to companies in existence prior to that date and, therefore, companies registered up to 1919.

Mr. HOLMES: If that be so, the Chancellor of the Exchequer has put down something in which he is really very much misleading the Committee.

Sir R. HORNE: I am told that what was said by the hon. Member for Hampstead (Mr. G. Balfour) is correct, and that such companies would not be regarded as registered under the Acts of 1908–17.

Mr. HOLMES: Is it not the case they may be registered as private companies?

Mr. D. HERBERT: Registered as a private company, but that does not alter the date of the first registration, there is no re-registration.

Mr. HOLMES: The next point I want to make with regard to the Clause is this—but perhaps the Solicitor-General would like to explain the point I have just put.

Sir L. SCOTT: After the hon. Member has spoken.

Mr. HOLMES: While the Solicitor-General is thinking this point over, perhaps I might ask the Committee's attention to another point. Where companies come under the provisions of this Clause it means that every individual shareholder has to disclose his total income to the Special Commissioners, and this will also be known to the directors and the officials. That must be so. The Special Commissioners are going to say to a certain company, "You have put to reserve, let us say, £2,000 more than you need. We are going to allocate that £2,000 as additional income for last year over all your members." They take the list of members and divide that £2,000 out according to the holding of each member. Then they go to a shareholder of the company and they say: "There is £100 of this reserve allocated to you; what is your total income from
all sources?" And if the man has less than £2,000 he will not be liable to Super-tax.

Mr. A. M. SAMUEL: On his share?

5.0 P.M.

Mr. HOLMES: No. If a portion of this reserve goes to a man who is not liable for Super-tax he cannot be assessed for Super-tax on this portion. But they allocate another portion to a man with a larger income, say £20,000 a year, and he pays at the rate of whatever the Super-tax may he, and on the amount of the reserve allocated to him he would pay, say, tax of 5s. in the £. I hope the Committee realises the amount of work all this involves. The principal shareholders will receive demand notes for Super-tax. There is no need for them to pay it at all under this Clause. I will try to show why in a moment. The company pays it. When the demand notes are received they say: "On A's share of the reserve there is no tax payable; consequently the directors and officials say, "This shareholder has less than £2,000 a year." They discover that D's rate is 5s., say, and they consequently deduce that he has £20,000 a year, and so they can work out exactly from the Super-tax assessments the income which each shareholder of the company is getting. That is something quite new up to the present time, for the total income from all sources has been the secret of the Inland Revenue officials alone. Now every shareholder in a private company is liable to have his total income from all sources known to the directors and officials. I said just now that no share-holder in a company will himself pay the tax, and for this reason: He may sell the shares, and when the money is actually distributed—it may he two or three years hence—it will go to the man who then has the shares. The first man will escape the tax. If he is a share-holder he will wait and then he will allow the company to pay. That is going to bring another complication into the shares of the company, and the value of the shares will depend to a certain extent as to whether or not the undivided profits have been taxed as Super-tax. When those profits are eventually distributed they will be worth more than the ordinary dividend because they are not subject to Super-tax. The more one thinks about
this Clause the more difficult it becomes as to how a genuine trading concern as going to avoid serious complication which it ought to be spared. The Amendment which I have put down was designed to enable the genuine trading concern to escape from this inquisition. This Amendment would enable the genuine trading concern to avoid all these difficulties, and it would not prevent the Chancellor of the Exchequer from taxing those who are deliberately avoiding the tax.

Mr. MACQUISTEN: When this Clause was under discussion on a previous occasion, I then stated that the Chancellor of the Exchequer had set himself an impossible task. I am all the more confirmed in that opinion when I read the Clause. This Clause, we are told, was framed in order to prevent private companies from dodging the Super-tax. The Chancellor of the Exchequer has put in the forefront of this Clause its purpose which is said to be to prevent tax dodging. Unless it achieves that object, and that alone, far more injustice will be done to innocent people than to those who are dodging the tax. We are told that this Clause will affect over 60,000 companies who conduct a large part, of the entire business of this country. I am appalled when I think of the immense labour which is involved in the investigation of the business of those companies. In one way and another we have had an enormous increase of the number of officials in this country in various Government Departments and all this has added to the burden of the producing classes. When you come to decide the number of people who will have to investigate the business of over 60,000 companies, and when you have to decide what is a reasonable sum to be set aside for this purpose, no Department of State will be able to stand such an enormous increase of officials.
If this proposal be intended only to get at the Super-tax dodgers, I do not think there is a quarter of a million of money to be recovered, I was shocked when I heard an hon. Member state last time this Clause was debated that he would like to be able to point out to his constituents the names of the Members who wish to assist in tax dodging. How would the hon. Member like it to he pointed out that he wanted to have penalties inflicted on perfectly innocent
people? This is almost like the farmer who finding a wolf among his flock of sheep adopted the process of machine gunning the flock, which not only killed the wolf but the sheep as well. The right hon. Gentleman can only recover a comparatively small sum if this proposal is administered in the spirit in which it is said to be conceived. If, however, money in any serious amount is to be got, some revenue may be recovered for a year or two, but the effect will be that you will destroy industry. People will not go on with industrial concerns if they are to be told by a Special Commissioner what is considered to be a reasonable part of their actual income. I would like to ask, what is considered to be a reasonable time? Personally I do not think the word "reasonable" should ever be allowed to appear in an Act of Parliament. We must not forget that every business is different. One of the reasons why the immense number of ships which were sunk round this island were not salved was because it was considered that the burden would be so colossal that it was not worth any companies' while to raise those ships with a chance of a large profit, because a large proportion of that profit would be taken by taxation, while all the loss would fall upon the salvers.
Immediately this Bill is passed the people who want to avoid this inquisition will have no difficulty in adding another 50 shareholders, and then, no doubt, the Chancellor of the Exchequer will want to make the number 100. A business to which I have before alluded was built up by very thrifty people, and the majority of mankind dissipate their resources and do not save. It was said by Lord Bacon that anyone who wished to succeed in business ought to put aside two-thirds of his income, but I would like to ask, how many people are now putting aside two-thirds of their income? Those who have done this and who make that attempt are the people who provide the capital for developing industry, and those are the people who give us the chance of building up the great enterprises of this country both at home and abroad. How can the Special Commissioner say whether any company is putting aside more than is reasonable? Surely that is essentially a jury point. Do not confound in this matter the innocent with the guilty. In order to
get at the black sheep who are evading Super-tax, the Chancellor of the Exchequer is proposing to draw in the thrifty and industrious citizens who are endeavouring to build up business enterprises.
One of the reasons for the growth of these private companies is the necessity for more banking facilities. Many people have been driven into forming private companies because the bankers have insisted upon having the debentures guaranteed by shareholders of the company. That is why so many companies have sprung into being. This proposal will be a very great hardship upon those companies which were registered subsequently to 1909. A man in boom times has been described as an octopus. It was said by a firm eminent in commerce that the man who could not make money between the 14th July and the conclusion of the War must be a very silly person. The difficulty would be to keep any money for six years after the War. There is not a day passes but that a man who grew to great affluence during the period of the War, and carried his optimism into the times of slump depression after the War, goes into the Bankruptcy Court. This applies to many men who made enormous fortunes during the War. There may be one or two who had the prevision to cash out and to put their gains into liquid assets, but the vast majority failed to do that. The administration of this Clause will produce mental paralysis on the part of business men. Their business affairs will be rooted out by unsympathetic men earning salaries, not business men, and if the Clause is endeavoured to be administered as a revenue-producing Clause, I prophesy that the damage it will do will be immeasurably greater than any revenue that can accrue from it. If the Chancellor of the Exchequer wants to do justice—and presumably taxation is introduced for the purpose of doing justice—then I suggest to him he should put in the forefront of the Clause the purposes of the Clause, with the object of getting at the people at whom it is really aimed.

Mr. GEORGE TERRELL: I want to support the very strong request made to the Chancellor of the Exchequer to withdraw this Clause. I am perfectly certain that, as now framed, it is going to cost
more to administer than it will produce. It is a thoroughly bad Clause for the reasons which have been stated, and which I need not go over again. There are one or two points, however, which have not been touched upon. First, there is the case of two firms in the same line, competitors in business, one being registered as a company before 1909, and the other being registered after 1909. How unequal will be the incidence of this taxation in their cases? The one registered since 1909 will have nothing like the financial capacity to put by reserves and to prepare for a rainy day which the company registered before that date will possess. There is another point. As everyone knows, Super-tax is levied on the same principle as Income Tax. A trading company may not get the full allowance for depreciation, and very often there are losses which are not allowed at all in the deduction for Super-tax. Does my right hon. Friend propose to make the full allowances before he presses this further claim against the company? I think he ought to.
After all, he is out simply to get at certain classes who have been described as tax-dodgers, and in that we all want to help him. In doing it, however, he ought to see that he does not put a burden on the companies which is going to cost far more than it will produce in revenue. May I make this suggestion, if the right hon. Gentleman is still wedded to his scheme, let him drop 1909 and go to the War period when these tax-dodging companies were registered. He probably has the fullest information as to them; they were the creatures of the War. Let him take the date when the first one which he has reason to suspect was registered for tax-dodging purposes and use that as the date for the commencement of the operations of this Clause. A great number of companies would then escape the annoyance and inconvenience that the Clause in its present form will inflict. The Clause in its amended form is better than the Clause in its original form, but it seems to me it is a thoroughly bad Clause. It is not really going to get at the men whom the Chancellor wants to get at, and I suggest he should devise much simpler machinery for his purpose without causing unnecessary annoyance and loss to the whole trading community.

Sir F. BANBURY: I am glad to hear that the Chancellor of the Exchequer is prepared to exempt those companies which the Special Commission exempted from the Corporation Profits Tax. I had an Amendment down to that effect. I think his action in this respect will go a very fair way to remove the objection of certain people who have hitherto opposed this Clause. I will also venture to express the hope that he will make the date 1922 instead of 1921. It is possible that taking the date at 1921 it may be deemed to be retrospective and to that principle a large number of Members of this House have always been opposed. I do not like the idea of special people being able to investigate one's affairs; but when I have said that I cannot conceal from myself that the Chancellor of the Exchequer is in a strong position. Undoubtedly a considerable number of people have avoided paying the Super-tax. I was one of the Treasury Committee on New Issues which was appointed in 1914. There were five members of it. A large number of private people sent applications to us and stated that they desired for family reasons to convert their property into limited companies. It took some time to ascertain what their real reasons were, but eventually we refused all these applications. There can be no doubt there has been a considerable number of people who have avoided payment of this Super-tax.
My own idea is that the only real way to meet this difficulty is to make the Super-tax and the Income Tax one tax. I have said that over and over again. Indeed I have moved an Amendment in byegone days in order to ensure that. I think very likely if this Clause becomes law it will have the effect of ensuring that the Super-tax and the Income Tax are made one tax, and then this Clause will be unnecessary. But as long as the Super-tax and the Income Tax are collected as separate taxes, it will be necessary to have some Clause of this sort. I think the Chancellor of the Exchequer has gone a very long way to meet the objections of those Members who were opposed to his original proposal. There must be some cases of hardship. When you are going to impose a tax you cannot avoid hardships. But I do not believe myself there is very much probability of persons turning their companies into foreign companies and registering them
abroad in order to avoid this taxation. The hon. Member for Watford (Mr. D. Herbert) has pointed out the difficulties which will attend any person who turns his business into a limited company for the purpose of avoiding the Super-tax, and I would suggest that those difficulties would be equally inherent if he attempted to make it a foreign company. If he does so, what is he going to do with his assets? Supposing those assets are securities like War Loan or Debentures, or shares in railway companies or banks. On all those securities the Income Tax is deducted at the source, and even if he had converted his affairs into a foreign company, the tax on those securities will have been deducted before the income reaches him. In the same way if he held real property here, the Income Tax is assessed on the property and is levied on it, and it would be quite impossible for anyone to avoid payment of it merely by transferring his company abroad.
I am, of course, talking of the people who, I understand, the Chancellor of the Exchequer wishes to get at, namely, private individuals who endeavour to avoid the payment of Super-tax. The only way it could be done would be for the person registering his company abroad to hold nothing but securities payable to bearer, the dividends on which are payable in foreign countries. If he did that, then I think he might avoid Income Tax and Super-tax. But I am not at all sure there are many people who would be prepared to sell their home assets in order to invest in foreign securities payable abroad, for the purpose of avoiding the Super-tax. If the result of this Clause is that a large number of companies which were formerly registered in England are registered abroad, then the question would at once arise whether the Chancellor of the Exchequer could meet it. I do not know whether he could or not. The Clause applies to all companies registered after 1909, and I should like to ask why it is 1909. Was that the year in which Super-tax was first imposed?

Sir R. HORNE: Yes. That was the year when Super-tax was first imposed, and when the inducement to adopt such devices came into prominence.

Sir F. BANBURY: That does seem to me to be a more or less sound reason. In a case of this sort there must be a line of demarcation, and the result always is
that some unfortunate people are on the wrong side of the line. I do not quite see, however, how that can be avoided. If my small vote is of any value, I should certainly support this Clause on the understanding that the Government would alter the date from 1921 to 1922, and would exempt any company, in the case of which the Special Commissioners ordered a certain amount to be paid, from the operation of the Corporation Profits Tax, so that it should not be liable to both taxes. I do not know that it would make much difference if the commencing date were altered to 1914, as has been suggested by the hon. Member for Farnham (Mr. A. M. Samuel).

Mr. A. M. SAMUEL: May I explain why I took that date? I do not think that many companies were formed for the purpose of escaping Super-tax until the Super-tax became heavy, and it only became heavy after 1914. Why worry a whole lot of companies that were formed between 1909 and 1914, when it is more likely that these companies were perfectly straightforward trading companies, with no intention in the world of evading the tax?

Sir F. BANBURY: Undoubtedly it is the fact that when a tax becomes very heavy—and these two taxes are really nothing short of confiscation—it leads to evasion. Between 1909 and 1914 the tax was very much lighter, and there was not the same inducement to evade it. That is really the point, and I think it is one that is well worthy of consideration, because, surely, the Chancellor of the Exchequer does not wish to bring people into this net who really did form their businesses, or their own private affairs, into companies without any intention of evading Super-tax or Income Tax.

Mr. HAYWARD: This Clause is designed for a purpose which will have the sympathy of every Member of the Committee, but there seems to be no doubt that it will have results which have not been anticipated and are not intended. The Chancellor of the Exchequer has made several Amendments to his original Clause to meet points which have arisen since it was drawn, and already, in the discussion this afternoon, many fresh points of objection have been raised which appear to be well
founded and which ought to be met. I think it will be found that, the more the Clause is examined, the more points of objection will be found. I desire to ask one or two questions on points which do not appear to me to be at all clear as the Clause now stands. For instance, it states, with reference to the income of the company, subject to the Clause that
the amount thereof shall be apportioned among the members.
I should like to ask, and I think it is very desirable that we should know, whether the amount when so apportioned is to be paid to the members, or whether it will remain in the coffers of the company, and whether each member will be charged with the Super-tax, or whether the company will be asked to pay the member's proportion. If the member himself is asked to pay the tax and he has not been paid the dividends out of which to pay it, then he will be asked to pay Super-tax upon income which never comes into his pocket, and he may be quite unable to find it.

Sir R. HORNE: The company will pay ultimately; the member does not pay.

Mr. HAYWARD: Then that point is cleared up. One of the Amendments which the Chancellor has already incorporated, or is prepared to incorporate, in the Clause, is to the effect that it shall not apply to companies registered before 1909, the reason given being that it was in the year 1909 that Super-tax was first imposed, and that, therefore, it is obvious that no company formed before 1909 was formed for the purpose of evasion. It may be quite possible, however, for persons who wish to evade the payment of Super-tax in this way to acquire the shell of some company registered before 1909, and it would still be possible in that way to evade the tax. I am not at all sure that the best way in which to deal with this matter would not be by some such simple Clause as has been suggested by an hon. and learned Member opposite, namely, a statutory provision that, where reserves are put aside for the purpose of evading this tax, then these provisions shall apply. In that case each party would have recourse to the Courts. It would only apply to people who put by reserves for this specific purpose, and there would be a simple issue to place
before the Courts in the last event. I believe that in that way many of the difficult points which arise on this Clause, and many of the objections to it, might be obviated.

Sir HALFORD MACKINDER: I spoke at some length when the previous Clause was withdrawn last week, and I do not propose to repeat what I then said. At present I would merely say that this new Clause has been examined by a committee in Glasgow representative of a number of very important Scottish private companies, and I have had, together with my hon. Friend the Member for Kelvingrove (Mr. McLeod), the opportunity of consulting with them. In the first place, let me thank the Chancellor of the Exchequer for having incorporated in his new Clause provisions to meet the two main objections which, on the advice of that Committee, I took last week. I think it is quite obvious, after the discussion that has taken place, that there will be many evasions of the provisions of this Clause, and I think also that there may be some hard cases. Personally, I should have very much preferred a Clause drawn in the form suggested by the hon. Member for Watford (Mr. D. Herbert), which passed in review persons in the first instance, and then went for any companies which they controlled, if those persons had rightly exposed themselves to any operation of the authorities under this Clause. I realise, however, that in order to do that it would be necessary to have a fresh Resolution in Ways and Means, and I can quite understand that the Chancellor of the Exchequer is anxious to avoid that if it can possibly be avoided. After all, there will be another Finance Bill a year hence, and I shall be very surprised if supplementary provisions have not to be made in that Finance Bill to stop some of the bolt-holes which will be discovered in the provision which the Chancellor of the Exchequer is now making.
The hon. Member for North East Derbyshire (Mr. Holmes) asked just now why it was that some of us called out "No!" when the Chancellor of the Exchequer seemed disposed to accept an Amendment which would have made the Clause operative on the certificate of auditors of companies. The Committee to which I have referred has been very closely into that matter, and certainly
those who have been considering the matter in Scotland were unanimously of opinion that that would be a very unfair burden to put upon auditors in many cases. Young auditors would find themselves exposed to very considerable pressure from their employers, and very soon there would be suspicion as to some of the certificates given, which would lead to a series of appeals and all the evils which we fear under this Clause. It was on that consideration that we opposed that solution of the question. There may be words which one might like to see redrafted, hut, after deliberation with the very experienced and interested people to whom I have referred, I wish to say that my hon. Friend and I who put down Amendments, to which the Chancellor of the Exchequer acceded, do not propose to oppose, but to support the Second Reading of this Clause.

Major HILLS: I read this Clause with a great deal of sympathy, and with a desire to help the Chancellor of the Exchequer, but I was also anxious about a point which I have previously raised and which has been referred to, to-day. It is not only that I want to secure that reserves are not, subject to Super-tax, but I want to avoid the subsequent effect of making them subject to Super-tax, which would be to make people spend up to the hilt, and would lead to very bad finance. I may say in passing that a great many of the law s which have been passed lately did have that effect, and did encourage the belief, and the action, that the more money you spend the less the Government will get. I am very much afraid that the effect of some of that legislation is much greater than the Government realise. Anyone reading this Clause will not find in it one word of what the Clause really means. It is meant to catch Super-tax, of which the tax-evaders are now avoiding payment, and it would be a very great advantage if that were stated in the Clause. The advantage would be this: You now make the test as to whether or not you charge Super-tax, not the intention to evade, but the propriety of the reserve. By so doing you throw a perfectly impossible task on the Special Commissioners, and you throw on them the wrong task, because it is not their duty to say, and they cannot say, what is the proper reserve for a particular company to make; but they can say, and it is their
business to say, whether juggling with the finance of the company does or does not amount to evasion. Many cases might be quoted. I will just give two. You may have an estate in the country—and many estates are now being formed into private companies—which has been very badly run in the past, and in the case of which, for many years to come, the reserve must he, and ought to be, a large part of the income. Then you may have a company formed, as many are formed, to exploit a patent or new invention. Who can possibly say what the reserve should be for +he first few years? You may have a series of actions for infringement, and your whole profits ought to go to reserve. You cannot say what the reserves should be, and no Special Commissioners can say that.
Is it impossible to add a second Subsection making the test not the propriety of the amount put away to reserve, but the fact of evasion? I have not put it down as an Amendment, because it is a very difficult provision to frame. But I think the proposal of the hon. Member for North East Derbyshire (Mr. Holmes) goes rather too far. You cannot leave it to the Board and the auditors entirely if you are meeting cases of absolute evasion. I think you will have to have some outside body, and I believe the Special Commissioners are the best body. I think it is a real point, and I believe you will strengthen your Clause by that and you will not hit the companies whom the Chancellor has no intention of injuring. My second point is a very small one. Is not the number—five—who are to have a controlling interest in the company, too high? Could you not safely confine the operation of your Clause to companies which are controlled by three people or fewer? When you come to five, you include a great many old-established businesses and firms which have been turned into companies and where the control is held by four or five people. After all, what you want to get at is not the five person controlled company, but the one-man company, and the man who controls this company will not dare to allow the control to be shared by four other people, for he would part with the majority of the shares and allow the control to go out of his own hands. I hope on both these points, cm the small point of the number of persons and the much larger point of putting into your Clause exactly what you
mean, and giving that as the test to be enforced by the Special Commissioners, the Chancellor will meet me.

Lieut.-Colonel NALL: My hon. Friend the Member for Farnham (Mr. A. M. Samuel) said the Chamber of Commerce with which he is associated regard this as a satisfactory solution of the question.

Mr. A. M. SAMUEL: I did not say so. I said we agreed to accept the Clause as we cannot obtain from the Chancellor the words in my original Amendment.

Lieut.-Colonel NALL: I am sorry if I misinterpreted my hon. Friend, but the Manchester Chamber does not take that attitude, nor does the Cardiff one, because they believe, on advice, that it will be absolutely unworkable in practice. I want to follow the argument of the hon. Member for North-East Derbyshire (Mr. Holmes). What would happen in the case of a company, shall we say, of three shareholders? One holds 60 per cent. of the shares, and is liable to Super-tax, and the other two hold 20 per cent. each and are not liable to Super-tax. Only that part of the undistributed profits properly belonging to the man liable to the tax will be chargeable under this Clause. He may say, indeed he may be obliged to say, that if he does not actually draw this undistributed profit he may not have the cash to pay the tax due on that undistributed profit. He may refer the tax collector to the company. If the company has to pay the tax due on that part of its undistributed profits which properly belongs to the large shareholder will that payment be a charge on the general funds of the company, thereby prejudicing the holding of the smaller shareholders, or, if not, will it simply be deducted from the funds standing to the credit of the large shareholder in the books of the company? If that is the case, what happens? Funds have been placed to reserve out of profits according to the respective holdings of the different shareholders, but if one shareholder only has a deduction made from it to pay the tax on his share of the undistributed profit the net amount placed to reserve will not be strictly in proportion to the original holding of the three shareholders. So that where a business has for years been organised on a carefully balanced proportion of shares, one as against another or more shareholders, that balance will be constantly
upset, frequent readjustments in the shares will have to be made to meet the annual charge due on the profits of the one shareholder, and it seems to me that all that, in addition to being most aggravating to the companies concerned, is going to involve the Income Tax Department in a tremendous amount of work which they will never he able to cope with.
The Chancellor has met another point by saying companies brought under this Clause will be exempt from the Corporation Profits Tax. Whether he will lose much on the Corporation Profits Tax under that heading, I do not know. It may be it will be worth the while of some companies to come under the Clause in order to avoid the Corporation Profits Tax. A further objection, and a very important one, is that the income of individual shareholders in a company is now going to be disclosed to the officials of every small concern in which that man may have a holding, and of course in a small concern, where the few shareholders are also directors, all those people will get this information, so that the secrecy of the Income Tax system will vanish. Why such particular objection to this Clause must arise in a place like Manchester is that the vast majority of business houses concerned in the general trade of Manchester may become liable to the operation of this Clause, and it is grossly unfair that companies coming under this arbitrary limit of 50 shareholders should be treated in this way, whilst others in the same line of business, with 53 or 54 shareholders, would escape. Everyone is agreed that the original object should be achieved, and I beg the Chancellor to reconsider the proposal made by the hon. Member (Mr. Herbert) in order that these objections may be met and that we may not have still another millstone round the neck of small companies who are struggling to regain their prosperity. How the Chancellor is going to meet the other objections raised by firms engaged in wildly fluctuating trades, in which it is absolutely necessary to set off the losses of one year out of the profits of another year, I really do not know. It seems to me there again that houses engaged in the export trade, who made big profits in a boom which enabled them to cover losses in the succeeding slump, would under the operation of this
Clause be obliged to wind up during periods of slackness for the simple reason that any profits which they have in the past put aside in good years to cover the losses in a bad year, will be absorbed in Super-tax or else, under the operation of this Clause, will have been distributed to their shareholders. So that in the future, if this is made a permanent part of the Income Tax law, it will operate with great disadvantage in commercial quarters and inevitably clamour will arise for its abolition, and I only hope the Chancellor at the eleventh hour will be induced to reconsider this very involved question.

Mr. REID: I have listened to a great part of the Debate, and I think the Chancellor of the Exchequer must agree that the Clause as it stands is practically unworkable. I am afraid I am inclined to look at it from the point of view of my own profession, and I can scarcely conceive how anyone could possibly advise a client whether he was acting rightly or wrongly if he came under the provisions of this Clause. It really amounts to putting the management of businesses into the hands of the Special Commissioners. An hon. Member has called attention to the fact that there are a number of moribund companies on the companies' register. That same point struck me, and I have made inquiries about it, and I am told that there are any amount of them, and occasionally there are cases where a promoter wanting to float a particularly undesirable company has bought the interest in an old company, and after some transmogrification the shares go on to the public as the shares of a company which was floated 30 years ago. The number of people who want to do this kind of thing is comparatively small, and there are quite enough moribund companies to supply them with all they want.
6.0 P.M.
But apart from that, I think this Clause starts the wrong way altogether. Several hon. Members have suggested that it ought to begin by saying what it is intended to do. We are all discussing this matter on the assumption that it is intended to prevent people making use of the machinery of the Act for the purpose of evading Super-tax. It is difficult to say what it is reasonable to put to reserve, but it is easier to say whether or not a company is being used for the purposes of evasion. I do not
think in this case the Income Tax official approaches the matter from the point of view of the company at all. He sees an individual who obviously ought to be paying Super-tax. Then he finds he is not making a return, or is making one which shows he is not liable to Super-tax. Then he finds the company. I suggest that the proper course to adopt is to go direct to the matter, to substitute for this Clause another giving the Court power to revoke the incorporation of a company where it is shown to the satisfaction of the Court that the company has been formed, or is carried on for the purpose of evading Super-tax. If that were done, it would really effect the object. It would have a further advantage. The Special Commissioners are not a suitable tribunal for dealing with this matter. They sit in a room. The whole thing is conducted in private. On ordinary Income Tax matters that is quite proper, but in a case of this kind, where a man is evading taxation, there is no reason why the hearing should be secret. It ought to be an open Court. Probably in many cases it would prevent men from forming these companies if they knew that the matter would be discussed in open Court. We may take an example of what happened during the War, when we had cases of food hoarding. Many people talked in a casual way about food hoarding, but when cases came into Court people who were convicted found that it really did bring unpopularity upon them. A man who has formed a company of the sort now under discussion would, if he were brought- before the Court by the Attorney-General, consider that he was in an awkward position, unless he had a very good defence. I think we can trust the High Court. This is essentially a matter for the High Court. We can trust a judge and jury to say whether, in fact, a company is being formed, or is being carried on for the purpose of evading taxation. If the Court revokes the incorporation from the date that the man had begun to evade Income Tax, then he becomes a private person again, and is liable for Super-tax. Some provision would have to be made for the creditors. On the lines I have suggested, a practical scheme could be worked out, but I do not believe that the present Clause is administratively possible.

Sir WILLIAM PEARCE: What is wrong about the Clause is that its intention is not clear. The Government are out to stop evasion, but the Clause as drafted really makes the 60,000 or 70,000 smaller companies open to inspection or review by the Special Commissioner. If the Chancellor of the Exchequer is able to say that it is not the intention of the Government that the Special Commissioner should examine and review every one of those 60,000 or 70,000 accounts—if they are going to do it they will want a very large increase of staff in the office of the Special Commissioner—it will get rid of a good deal of disquiet which the public are feeling. Whatever may be the intention of the Government, the public think that this is a dodge to increase the revenue, and that the accounts of the 60,000 or 70,000 companies will be open to review, with the object of the Government getting some extra revenue out of them.

Mr. HOLMES: Does the hon. Member consider that it is sufficient to get a declaration from the Chancellor of the Exchequer? I have had a good deal of experience in the last five years in the interpretation of Excess Profits Duty, from the 1915 Act onwards, and I have quoted to the Inspectors of Taxes and the higher officials at Somerset House the speeches of Mr. McKenna, then Chancellor of the Exchequer, and the hon. Member for Cambridge (Mr. Montagu), then the Financial Secretary to the Treasury, in interpreting the Bills when they were before this House, and they have always said, "We cannot take what is said in the House. We must go by the Act."

Sir W. PEARCE: That is quite true. The wording of the Act is what rules the position, and not any statement by the Chancellor of the Exchequer. However, the smaller commercial community would like a declaration from the Chancellor of the Exchequer as to the intention of the Government. It would, to some extent, quieten the commercial mind. There is one objection to the Clause which is inherent in it, and very unfortunate, and that is that this Clause is to the detriment of the smaller companies and allows the very large ones to escape. In these days, the difficulty is to the smaller companies. It is difficult in any industry for a small company to hold up its head
against the big corporation, and if this Government, or any Government, tries to rake in revenue by this Clause, it will fall upon the smaller man, who is in a bad position and not so well able to take care of himself. The particular reason for the public disquietude is that the intention of the Clause is not absolutely clear in the wording. It does not appear that the Government are out to stop evasion, but, rather, that they are out to raise revenue.

Sir J. HARMOOD-BANNER: I was a member of the Income Tax Commission, and I should like to say that in so far as the Government seeks to meet a point which we considered of great importance, namely, getting rid of evasion, I shall give them full and hearty support. If something could be done to differentiate between the real, bonâ fide trading companies, and companies which are out for evasion, we should not have anything to complain about. It was abundantly clear in the evidence we had before the Income Tax Commission that when Super-tax was created there was at once, amongst very clever people, an effort made to create companies, private family companies, so as to avoid the tax. For four or five years after the Super-tax was introduced there was not very much evasion, but when the Super-tax got higher, during the War, there was an enormous amount of it. I have no doubt that the hon. Member for East Derbyshire (Mr. Holmes), who is a chartered accountant as well as myself, has prepared statistics for many family companies which were to be created, and by which they arrange their funds so as not to pay Super-tax. Solicitors who are Members of this House would also admit that they had advised clients in regard to creating companies of that description This really only started after Super-tax became oppressive; after the Super-tax had become rather penal, the penalty amounting in some cases to 12s. in the pound.
So far as the prevention of evasion is concerned, the Chancellor of the Exchequer can make the provision as strong as he likes, and I shall fully approve of it; but I should like him to make some differentiation between companies formed to evade tax and the bonâ fide trading companies which are helping the community by providing labour, and adding to the prosperity of the country. After the War, a great many companies,
such as Coates', the Imperial Tobacco Company, and others, capitalised their reserves. They said that it made a very bad show to the world if they paid very high dividends, so they decided to capitalise their reserves, and their shareholders received a bonus share, for which they paid nothing. In that way they made the capital larger, and the dividend smaller on the increased capital, so as to satisfy the labour men by declaring a 5 per cent. dividend instead of a 10 per cent. dividend. That was done to a very large extent, and the Income Tax Commissioners tried to make these bonus shares subject to Super-tax. They carried the case to the House of Lords, but the decision was against them. It was decided that these shares were conversion of income into capital, and having been converted into capital they were not subject to Income Tax.
The Chancellor of the Exchequer is now making attempts to get behind that decision and to get hold of the reserves, so that they will have to pay Super-tax. He is going to do a most unfair thing. If Coates' and the Imperial Tobacco Company do this sort of thing they will pay no Super-tax, but if it happens to be a company of 10 or 30 cotton spinners in Oldham, or a flour mill company, who create a company and create reserves, they will have to pay Super-tax upon their reserves, because they are private companies, while the very big companies, which may still go on converting their income into capital, will not pay anything at all. That is going to be a most unfair tax upon the private companies. There are many colliery companies in which there are only 20 or 30 shareholders. In future they will be subject to the condition I have stated, and will have to pay Super-tax because they happen to be private companies; but if the company is a huge limited company they can do this thing and they will not have to pay the tax. The Chancellor of the Exchequer ought to consider whether he could put into his Clause some words to show that it is to touch evasion but not to touch; the bonâ fide trading companies which, for years, have conducted their business in a regular, industrious way and have enlarged their business. Now they are to be treated differently from those who are in big companies, and are going to be penalised because they are small companies. I do not know exactly how the
Chancellor of the Exchequer could do what I suggest. So far as paragraph (a) is concerned, there is no necessity to go back as far as 1909, when the Super-tax started. I think that it would be quite reasonable if instead of 1909 we had 1912 or 1913. That would give a, little more time for those companies which were conducting their business in the ordinary course. The Commission on Income Tax were ready, if they could, to have got at some of these distributions in the shape of income which was made bonus shares. But the law decided against them. There should be no differentiation between the honest company and the other company. On a point of procedure, I would, like to know how, when the company are to be forced to pay the Super-tax, they are ever going to get their money back. They have to make a schedule. One man pays nothing, another man 9d., another 2s., another 3s., and so on. Undoubtedly, as it stands, there is no power from the company to recover from the man. I would plead on behalf of these small companies that they should not be penalised.

Mr. PENRY WILLIAMS: I am not pleading for the one man company or the company which deliberately sets itself out to avoid its fair share of taxation. I agree that capitalised reserves, distributed as shares, should be liable to Income Tax and Super-tax, and also that any man's money borrowed from a company by a man who has control of the company, should be treated as the income for Super-tax purposes. While saying that I do want to ask the right hon. Gentleman if he is treating the private trading company fairly—the bonâ fide trading company? In the North of England that company is the backbone of the commerce of the country, whether it be a small ironworks firm, a shipbuilding firm, a chemical firm or any other. And those companies have been built up by father and son, or by two or three brothers working hard, and living hard, allowing their money to accumulate to develop their property. Now you are superseding their functions as directors, in deciding the amount of dividend to be paid, and this Clause says that unless, in the opinion of the Special Commissioners, a reasonable proportion of the profit or the income is distributed the firm shall be liable for Super-tax. The Chancellor of the Exchequer must have
considered what was a reasonable proportion of the profits to distribute before he came to the conclusion to insist on reasonable proportion. He must have ascertained what proportion of gross profit is distributed by a well-managed company. Can he give us any information as to what proportion of gross profit is distributed by a well-managed company?
If Members of the Committee will go into the figures they will be surprised to see how small a proportion of the gross profit—[HON. MEMBERS: "Net profit!"]—or the net profit ever reaches the shareholder's pocket. I have had some figures taken out. I got the balance sheet the other day of a big company which has been mentioned in this House. It showed that it distributed last year to its shareholders 44.2 per cent. of its profits. I have here the case of another well-managed company in the North of England. If the right hon. Gentleman wants the name I will give it, but I do not care to pass it across the Floor of the Committee. I asked this company what proportion of its profits it distributed to its shareholders during the three pre-War years, and the three post-War years, taking the gross profit on the balance sheet. The figures for 1922, 1923 and 1924 were: 40.3 per cent.; 41.5 per cent. and 39.3 per cent. For 1919, 1920 and 1921 the figures were: 23.6 per cent., 38.8 per cent. and 31.7 per cent. That was practically 40 per cent. before the War and 30 per cent. after the War. I have had some opportunity of studying the profits of private companies. In some of them I have an interest and particulars as to others have been given to me by friends, and the percentage of the gross or the net profits is very much less than that. The remainder was passed back into the business to help to create commerce, trade, and employment for the people in the industry.
We are suffering to-day from the fact that the Government and the local authorities and everybody else are extracting too much of the profit of industry. You cannot allow the Government to take 50 per cent. of your profits in Super-tax and Income Tax, and rates to take 20 shillings or 30 shillings in the £ of your rateable value to pay increased charges for public service, and pay a dividend to
your shareholders and then have enough money to put into your business. That percentage has gone up year by year until it has reached a point when it is having a very serious effect on our industry and is doing a great amount of harm. The provision that there shall be five controlling shareholders, is of no value because if those five—it may be six or seven—are brothers and sisters or father and sons, then they are considered as one holding under this Clause, and and that hits the bonâ fide family trading company. That is a very disastrous thing to happen to our commercial life. I object strongly to the Commissioner of Income Tax or any other body superseding the function of the directors, and telling them what dividends they ought to declare and ought not to declare, but at the same time I am willing to give the Chancellor of the Exchequer and the Government every power to prevent deliberately planned fraud on the Revenue by way of evasion of Super-tax.

Sir R. HORNE: I listened with great care to the speeches which have been made on this very important matter, and one reason why I did so was that I was anxious to hear about any failure on my part to arrive at a solution of a question which, although it is difficult, ought to be capable of adjustment. The evil is admitted, and one reason why I feel compelled to take action now, and one strong reason why I should feel reluctant to abandon this Clause at the present moment with a view of bringing it up again some time next, year, is that I have had very accurate information that advice is being given at the present time to clients, both by legal firms and bankers, as to the particular methods which may be taken to evade Super-tax, both by the creation of trusts and by the creation of this type of company. I agree with what has been said by the hon. and gallant Member for East Middlesbrough (Colonel P. Williams) that the burden of taxation upon this country at the present time is very heavy, and that the taking away of so much money from business tends to destroy the prosperity which everybody wants to see in this country. But if we let this tax-dodging, as somebody has described it, continue, obviously the burden must be heavier upon those who are doing their duty by the State, and the very people whom you want to encourage
to create industry are having their opportunities destroyed.
Accordingly, I hope that the Committee will understand my anxiety at present that we should not get over this matter by abandoning the proposal. I would much rather, if I might, appeal to the Committee to see whether I cannot find a solution which will be satisfactory to the great body of Members of the Committee. I feel the force of the argument put forward by the hon. and gallant Member for Durham (Major Hills). This is, indeed, a Clause to detect evasion and, perhaps, it ought to be prominently stated. The intention to evade, as the hon. and gallant Member said, is the important thing. But you can never discover intentions except by overt acts. You cannot get inside a man's head, as has often been said in the Law Courts, and discover what his motive is. You can only interpret his motive from what he does. What is the overt act which leads you to suspect an intention to evade? It is the fact that he does pile up reserves, which are unnecessary for the purpose for his business, and which he has the opportunity afterwards of putting in his pocket, meantime evading the Super-tax, which decent business people pay. The stoppage of distribution is the only overt act which you can find. But I am prepared, if that will meet the difficulty, to put down words or to accept words which may be suggested, and which commend themselves to me, to make it perfectly plain that the failure to distribute must lead to the conclusion in the minds of the Special Commissioners that it was due to an intention to evade the Super-tax.
It has been suggested that there is a great deal of apprehension that the bonâ fide company is by some means or another going to be seriously inconvenienced. I hope that that is not so. There is certainly no intention of embarrassing any bonâ fide company. Let me remind the Member for North-East Derbyshire (Mr. Holmes) that you do not get rid of the difficulty by saying that no company carrying on a bonâ fide trading business shall be subject to investigation. Obviously a man who is going to evade may be carrying on quite a bonâ fide trading business. The point is as to what he does with the proceeds of the bonâ fide business. That point is not met, by saying that the Clause shall
not apply to a company carrying on a bonâ fide business. Indeed, so far as words can be suggested, or I can find them, which will prevent the investigation of any business which is being carried on, no doubt for the benefit of the trader, but whose proceeds are being applied legitimately—all that class of company I am anxious to keep out of the scrutiny.
The hon. Member who opened the discussion made a point which, for the moment, I do not see how I can get over. He referred to a company composed of individual members who were themselves limited companies.

Sir W. JOYNSON-HICKS: No company, as far as I know, is made up solely of a limited company. There are many companies in which the great bulk of the shares are held by a limited company, but they must all have at least two shareholders, and there is nearly always a general manager or two or three of the staff put in as shareholders; and that would authorise the Special Commissioners to come in and examine into the banking companies and reinsurance companies which I have mentioned.

Sir R. HORNE: It would not be worth their while. I am certain that the administration of this matter will be confined strictly to the prime object of the Clause, and that is to detect the person who is evading. The hon. Member for North East Derbyshire raised a difficulty about the way in which the Super-tax would be exacted. He pointed out that the process would involve a disclosure of the whole income of individuals, which had never previously been required by Income Tax or Super-tax law. I agree that there is a difficulty there, but it is avoided if the person who is called upon to pay Super-tax himself pays it and does not leave it to the company to pay. It is only if he himself refuses or fails to pay that the company is called upon, and disclosure takes place. On the other hand, the point that the company has no way of getting back from the individual the tax which the company paid on his behalf is entirely fallacious, because the terms of the Clause are that the company shall pay on behalf of the individual, and in law the company would have the means of exacting from the individual taxes properly paid on his behalf. The hon. and learned Member for the Hulme
Division of Manchester (Lieut.-Colonel Nall) drew a very gloomy picture of what was going to happen to various small companies that had gained a profit one year and lost money another year. I am not sure that the Committee thoroughly understand that these private companies would not be put in any worse position than a private firm whose whole income is to-day subject to the payment of Super-tax. Accordingly, I cannot imagine more improvidence on the part of private companies than one would expect on the part of private firms. I cannot see how the mere exaction of Super-tax from a private company is going to drag them to ruin, when in point of fact that is the process which the private firm faces every day in the year.

Lieut.-Colonel NALL: The private firms turn themselves into companies.

Sir R. HORNE: A great deal of business is carried on by small private companies, and there is an enormous number of firms which have never turned themselves into private companies, whose partners regularly pay Super-tax on their share of the income of the year.

Colonel P. WILLIAMS: They have not a limited capital. They have the full capital in their pocket, whereas the limited company has only a limited capital.

Sir R. HORNE: That is a detriment rather than a benefit. It really means that all they have may become the subject of their obligations. In the private company the individual knows he may never be worse off than the amount of capital he puts into it. Therefore, he is in a more advantageous position.

Mr. D. HERBERT: The unfair competition is as between the company which comes within this Clause and the one which does not. There is on the one hand a public company, carrying on a particular business and able to pile up huge reserves. The smaller company coming within the Clause will not be able to pile up those reserves.

Sir R. HORNE: Again, I cannot imagine any circumstances in which it would be held that the private company will be in error in piling up reserves which the public company might legitimately accumulate. The theory upon which many Members of the Committee
are working is that the Special Commissioners in every case will say that the Referees will support them in saying that everything must be distributed up to the hilt. Nobody will be as mad as that. It has been suggested that the Commissioners do not understand business. But the Board of Referees is a board of business men. Members of the Committee know very well how they are composed. There is no representative of any Government Department among them. They are a committee of business men in whom I am certain the public have every confidence.

Lieut.-Colonel Sir F. HALL: Suppose a company earns 7 per cent. on its capital and it pays 2 per cent. or 3 per cent. Would the shareholders or those who owned the balance be liable for Super-tax on the balance, or what would be considered a reasonable dividend?

Sir R. HORNE: Nobody is going to say what would be considered a. reasonable dividend. There are many cases of public companies and private companies which have piled up large reserves, in view of anticipations as to the future of their businesses. No one will quarrel with them. In point of fact, the cases which the Special Commissioners will take up will be comparatively few, but they want to get at the real cases where money is set aside for reserve with a view to evading payment of Super-tax. The right hon. Baronet the Member for the City (Sir F. Banbury) made two suggestions, and I am prepared to agree to both of them. I am willing to agree to a modification of the Clause by substituting 1922 for 1921. It was also suggested that we should begin from the point of view of the time when Super-tax really became heavy, rather than from the time when it was first imposed. I recognise the force of that argument, because I think it is true that this device was not practised to any extent prior to a period at which taxation became so heavy. I am quite prepared to meet the opinion expressed on that point. It has been said, on the other hand, that, no matter where you begin, advantage will be taken by companies previously registered, in which shares may be purchased in order to use them for carrying out the evasion of Super-tax. I see that that might be done, but between now and the Report stage I shall try to find words to avoid that possibility.

Mr. D. HERBERT: Has the right hon. Gentleman considered the question which I put to him as to loss of Income Tax in the case of companies registering abroad?

Sir R. HORNE: I must beg my hon. Friend's pardon for not having referred to that point, which for the moment I had forgotten. Quite frankly, my answer to it is that which was made from the other side of the House. I do not anticipate that many people will register abroad for this purpose. If they do it will indicate a direct intention of evading the obligations which, as citizens of this country, they owe to the State. I do not think many people are going to adopt that device. If they do, it can be dealt with at some subsequent period. The Resolution on which this Clause is based would not allow me to deal with the matter which the hon. Gentleman raised, and I am afraid it is not competent now to go back upon it. I do not think we shall lose much in the way of Income Tax under that head as circumstances are at present. Circumstances might subsequently arise which would develop some such situation as has been described, and then, of course, we should have to deal with it.

Sir WATSON RUTHERFORD: I make no apology for intervening in the Debate on this question, though it is quite true it has occupied all the time since the ordinary business commenced. It is an exceedingly important matter. If the business community are to understand, that between now and the Report stage, the whole of this Clause will be recast and will be put in an entirely different shape, then, of course, it is obvious we would be wasting our time in discussing these exact words. Further, I think the Chancellor of the Exchequer must be convinced that there are overwhelming objections to almost every Sub-section of this Clause as it now stands. It is capable of being ridden through, and of having its provisions evaded, just the same as was the original text. I could give him, even now, half a dozen ways in which, if this Clause were passed, the tax could be evaded just as easily as before. The Committee want it made perfectly clear that they are against the evasion of any tax. We want to get at the evaders of taxation to make them pay
up and, if necessary, to punish them. The Chancellor asked if anybody could suggest a few words which might have the desired effect, instead of this Clause occupying a page and a half. I suggest a few lines which I think would carry out the real object explained by the Chancellor of the Exchequer—the object which we all want to achieve. I suggest something like this:
In any case where, in the opinion of the High Court of Justice, a company has been formed or is being carried on, for the purpose of evading Super-tax the Court shall have power to revoke the registration of such company from such date as the Court shall think fit, and the company shall, as a penalty for evasion, be liable to pay double the quantity of Super-tax that would have been payable if the company had been properly formed.
There in a few simple words, taking the place of this page and a half Clause, is a provision which could not be evaded, and would impose a proper penalty for this kind of evasion. The Chancellor before the Report stage should consider something of this kind.

Lieut.-Colonel WILLEY: This Clause has been discussed at considerable length and sufficient has been said to impress Members of the Committee with the many difficulties that may arise in connection with it. As has been said by the last speaker, it is of great importance and it is causing apprehension to the trading community as a whole. For this reason, I had hoped that the Chancellor would have promised some greater modifications than those which he has indicated. In the absence of that, I think a little further time might be taken up in pressing some of the points which will justifiably cause apprehension. We are now commencing legislation which necessarily must be extended. Anyone engaged in business knows that the wording of the Clause will need substantial modification as time goes on, as opportunities will readily present themselves to the astute minds of those who wish to evade the object of the Clause, an abject with which the trading community as a whole is in complete sympathy. One cause for apprehension is that it is felt that it is not possible for the Special Commissioners to readily distinguish as between the class of company which will not fall within the object aimed at here, and the other class which probably should come within it.
This provision extends the supervision of the accounts of small private companies. Those hon. Members who before the War were engaged in business in America are familiar with the substitution of incorporated companies for partnerships which went on much more rapidly in America before the War than it has in this country since the War and which was brought about entirely by the heavy burden of taxation. We realise that this is bound to take place. This proposal opens up a vista of further investigation on the one hand and an extension of bureaucracy on the other, followed by continuous fresh legislation. We might think that this was intended as a benefit to legal talent because, as the Chancellor has said, a tremendous amount of legal energy is being occupied at the present moment in the invention of means whereby taxation can be evaded. But in addition to that, we are going to put a bigger burden on to the Special Commissioners of Income Tax, already overloaded, and we are going to hinder the rapid passage of accounts.
Those Members of the Committee who, like myself, are members of the board of a joint stock bank can easily visualise the difficulties which will be added to the direction of the big financial institutions if unexpected calls can be made after the survey of a balance sheet. Necessarily we have institutions with branches running into 2,000 in some cases, where the personal element which existed in banking in the past no longer exists, but instead direction of their affairs is along the lines of close, cold-blooded examination of the balance sheet, and on that balance sheet advances are made to the continually increasing number of private companies. Now we are to find the presentation of that financial condition, quite proper and quite correct at the time, can be suddenly and entirely reversed by the introduction of a new decision which was never contemplated. That is going to strike disastrously at the security which banks have. The stability of our financial institutions is of great importance to the country. The ability of their management is something which the country has a right to be proud of, and I think it can be rightly said that the conduct of the joint stock banks in the period of staggering deflation which we have gone through in the past two years has been
a subject of admiration. Now something is going to be started which will add greatly to their difficulties.
The Chancellor said it was not the intention of this legislation to penalise private companies in the way of putting them in a disadvantageous position as against partnerships. But these small companies are going to include a large number of subsidiaries of foreign corporations who contemplate starting in this country and developing and extending business. We are going to discourage the establishment of these foreign branches. Then there is the additional point of the difference between the manufacturing business and the merchanting business. In the first case it is obvious the reserves put aside are not necessarily as great as they would be in merchanting concerns. We have seen in the last few years some staggering losses sustained by big private companies in merchanting. I venture to say those losses have been in excess of what any body of Special Commissioners could have contemplated as regards the necessary provision for reserve of security. Some companies which would otherwise have been partnerships have recently been made private companies, having foreseen that they should put aside reserves which otherwise would have had to be distributed, and probably the activities of those concerns would have been reduced, to the general disadvantage of employment in this country.
It is the manufacturing concerns, however, to which I particularly wish to draw attention. Here, we come into the difficult field of the capitalisation of the producing unit. That is a matter of supreme importance. There is the difference which arises in the capitalisation of machinery. We may have, on the one hand, a plant, old and well managed, with its machinery written down almost to the minimum, perhaps to one-fifteenth of its value. If it was suggested to the Special Commissioner of the Inland Revenue that such machinery should be written up, for purposes of greater depreciation, it would not be permitted. On the other hand, we have a new concern, built on the inflated values which existed in 1919. It is obvious that the profits made by those two concerns, doing the same work, producing the same material, selling at the same price, must he essentially different. How is it
possible in such cases to tell what is an equitable reserve and what is not? In my position I have had to scrutinise the cost sheets of a large number of concerns, and I found it almost incredible that there could be such a wide margin of difference between the cost of production of identically the same article, as between one factory and another. Is it suggested now, where a firm by ability of management, prudence and forethought, can put aside reserves, or is in a position to make big profits, and is continuously reinvesting them in the business to the extension of employment in this country, they are not to be exempt? They are not being squandered, they are not distributed in dividends, nor are they being put to the private uses of the individuals who may happen to own the capital.
7.0 P.M.
I think the Committee will realise that where inevitably such distinctions between cases of manufacturers exist it is going to be very difficult to establish what is a reasonable reserve. For that reason I think the time of the Committee might be occupied in pointing out how legislation of this kind—admitting that some kind of legislation is necessary—how the drafting before us necessarily causes some apprehension amongst the commercial community. It is with regret that we find that the Chancellor of the Exchequer has reluctantly to admit, I will not say a second failure, but a less success in producing a drafting which would meet all difficulties. On the grounds of financial prudence and of the danger of the extension of bureaucracy—which last we already have had too much of, during days of control under D.O.R.A.—I hope the Chancellor of the Exchequer will consider a further modification of this Clause.

Mr. MACQUISTEN: I would ask what is the good of passing this Clause, which can be evaded at once by the principals of any company? What is the use of passing it, as a company can emigrate? Why should not a company emigrate, as well as an individual? If an individual feels that his taxes are too high, he can emigrate. Only the other day I noticed that the right hon. Member for the City of London (Sir F. Banbury) pointed out that the reward for emigrating a huge business, and for getting away from taxation, was to become a member of
another place. I saw that stated in the Press, and it was not contradicted. If that can be done so easily what is the use of passing this legislation which, as the hon. Gentleman who has just sat down has said, can only result in the crippling of industry and in the development of other difficulties?

Sir W. JOYNSON-HICKS: May I make a suggestion to the right hon. Gentleman? We are all agreed, as he says, that we want to catch the tax-dodger. The crime is not in accumulating a reserve fund, the crime is when the money is got out of the reserve fund. That can he done in one of three ways. The taxpayer can put his hand into the pocket of the company and get the money out either in the form of a loan or in the form of winding up a company, or in the form of distributing the reserve by paying the money out in bonus shares. Those are the three ways of evasion, and the right hon. Gentleman cannot usually catch these people. By his present plan he gets the man or the company who has not committed a crime but has built up a reserve fund. Lot him go forward and catch the man who is dipping into the reserve fund and make him liable to Super-tax. It is quite clear, as the right hon. Gentleman admits, that his own Clause will not do. He should withdraw it and ask half-a-dozen business men in this House—as has been done by other Chancellors of the Exchequer in the past—to meet and consult with him and frame a Clause which would have the effect which we all desire, namely, to catch the tax-dodger, and not to endanger the real business man.

Question, "That the Clause be read a Second time," put, and agreed to.

Sir W. JOYNSON-HICKS: I beg to move, in Sub-section (1), to leave out the words "it appears to the Special Commissioner that."
I am sorry the Chancellor of the Exchequer did not accept the proposals which were made to him. I do not think his Clause will carry out the object he desires. The object of my Amendment is to give a company that is attacked the right of appeal to the courts of law. Under the present provisions of this Clause the Special Commissioners of Income Tax may say, "It appears to us that this company or that company comes
within the provisions of the Clause." There is no appeal from their decision, and they might come down and ransack the whole of the affairs of that company. To that the business community strongly object. I do not propose to make a long speech. We have had speech after speech this afternoon from various members of the, business community, objecting very strongly to the increase of bureaucracy and the giving of additional powers to bureaucracy. The business community does, at least, trust His Majesty's Courts of Law. The Chancellor of the Exchequer has promised that be will put words into the Clause that there is only to be an appeal if there is an attempt to evade. In view of that my Amendment becomes a much more serious question than before, because that is a matter for a jury. Under this Clause as it is going to be amended by the Chancellor of the Exchequer, a company cannot be attacked by the Special Commissioners unless they first find as a fact that it has been formed for the purposes of evasion. Surely my right hon. Friend must see, after giving way on that question and making it apply to cases where there is an evasion, that there must be a right to the subject before he is convicted of attempted evasion of the tax to go before a court and a jury. It becomes, therefore, a question of quite definite—I do not use the word "crime"—but of a criminal intention, of a distinct and definite intention to evade the tax, and unless that criminal intention is established the Clause will not apply. The Clause as it stands leaves the Special Commissioners completely masters of the situation. If my Amendment were carried, the Clause would read:
Where any company to which this Section applies.
etc. It would have to be established in a Court of Law that this Clause applies to a company, and that this is a company formed for evasion. My Amendment has become a much more serious question since the Chancellor of the Exchequer has agreed to incorporate in his Clause, as a condition precedent to the Clause acting, the words "when there is a proposed evasion of taxation." You must not leave the question whether a company is formed for the purposes of evasion to the Super-tax Commissioners. You must give anyone who is challenged with criminal
evasion the opportunity of going before a Court of Law and of seeing whether it is a criminal evasion or not. The legal effect of the Amendment will be that the Commissioners must establish to the satisfaction of a court of justice that any company which they claim to be within the purview of this Clause must be a company formed for the purpose of a criminal evasion, and that therefore they have the right to deal with them.

Mr. MACQUISTEN: I beg to support the Amendment, which brings out perfectly clearly the whole purpose of this Clause. Its purpose, and the plea put forward as a justification for it, is what it will deal with, the creation of a company whose members are few—it is generally called a one-man company—which builds up reserves and then, as the Chancellor of the Exchequer says, borrows its own money and never puts it back again, and so evades the Super-tax. That type of company must be perfectly well identifiable when it is seen. You notice the stigmata of tax evasion about it when you see it, not in the mere registration, but in the conduct and carrying on of its business. I do not think this should be put in the way of making it a criminal offence, and I demur to that statement by the hon. Member for Twickenham (Sir W. Joynson-Hicks). It should be recognised simply as a device that has failed. The way in which it would be proved before a judge and jury—and it is purely a jury point, and should be tried by them and not by the Special Commissioners—would be to prove the fact that a man has formed himself into a company and has drawn out the money without paying Super-tax. It is a very different thing to put it into the hands of the Special Commissioners, who are not there to do justice, but simply to gather in the taxes. You ought to get over the difficulty in regard to evasion, which would attach a certain amount of stigma to the persons concerned, by giving them the right to go before a jury, and not leaving them to the tender mercies of the Super-tax Commissioners. Unless this Bill is to be an honest Bill, and is to achieve its object, which is to get at the wrongdoers, it has no justification whatever. The purpose of evasion must be clearly established in the Bill, and you must leave a question of that kind to the courts of justice.

Major HILLS: I quite agree with the last two speakers that somebody must decide either whether an undue amount of money has been reserved or whether there has been an intention to evade. It has been suggested by the mover of the Amendment that that question should be carried to the Courts. I hope, most sincerely, that the Chancellor of the Exchequer will not accept that. The Special Commissioners are the proper body to decide the cases, and, with all respect to the hon. and learned Member for Springburn (Mr. Macquisten), they are much more than tax-collectors. They have to decide various cases of business and, as he knows very well, there are certain ways of appealing against a decision of the Special Commissioners and of taking the opinion of the Courts upon that. In the suggestion that I made a short time ago, and of which the Chancellor of the Exchequer was kind enough to express a qualified approval, I had no intention of suggesting that the Special Commissioners should be deprived of their right to act in these cases. The only suggestion I made was, that the position on which they should base their decision should not be an act such as putting money to suspense, but should be the intention of evading the payment of taxes. My suggestion would sweep away a good deal of this Clause, and would go wider and farther in the right direction than does the Clause. I have merely risen to say that I think the suggestion of the Mover of the Amendment would entail great expense and trouble, and that I hope the Chancellor of the Exchequer will not agree to it.

Mr. PRETYMAN: The Chancellor of the Exchequer undertook to introduce words to the effect that the test would be whether or not there was an attempt at evasion, and I think that has a very important bearing on this Amendment, because it seems to me that the Special Commissioners are the right people to decide that question. I do not think the Special Commissioners are the right people to form an opinion as to how much reserve a company ought to accumulate, but as to whether people are trying to evade a tax, that seems to me to be a very proper thing for the Special Commissioners to decide. I want to ask the Chancellor of the Exchequer whether he proposes now to suggest what his words are going to be, or whether he intends to
defer them until the Report stage. It is important to know, because this is a very large new departure which we are making, and it may be a very large burden on the trading community as a whole. It has been assumed throughout that evasion is in every case of a criminal nature, but may I suggest to the Committee that, as I have heard this matter put by people, either in commerce or owning property, who have considered the desirability of turning their business into a company, their object is this? Under the existing law of taxation a company pays Income Tax on a different basis from a private individual, and by merely turning your business into a company, without any evasion whatever, you pay less tax. A private individual who owns a business or an estate cannot accumulate any reserves at all, but has to pay on the whole of it. By turning his business into a company, he is allowed to accumulate reserves, and therefore it is rather dangerous to assume that he is doing this in order to evade the tax. It is perfectly legitimate.

Mr. A. M. SAMUEL: It was made clear earlier in the Debate that the word "evasion" should not be used as implying an unworthy act. The late Lord Macnaghten laid it down that there is nothing illegal or immoral for a man to do something which the law does not deal with. In the earlier part of the Debate those who spoke, including myself and the hon. and learned Member for Central Bristol (Mr. Inskip), took the point and made it clear that no one used the word "evasion" as meaning an unworthy act.

Mr. PRETYMAN: As long as that is understood, well and good, but the word has been used consistently by the last few speakers as if evasion in any form were a criminal act, and as far as I am concerned we ought to take every possible means to stop anything in the nature of an evasion of a legitimate tax, but I do not call it a criminal evasion where, by altering the character of your business, you can avoid a tax perfectly legitimately. If a company does not pay on its reserves reasonably accumulated, and if a private individual is not allowed to accumulate any reserves at all, then I say it is legitimate to turn his business into a company.

Sir W. J OYNSON-HICKS: That is not the point.

Mr. PRETYMAN: What I want to ask the Chancellor of the Exchequer is whether he proposes to introduce his words now or to recommit the Bill in order to introduce them, or whether he proposes to do it on the Report stage.

Sir L. SCOTT: The hon. Baronet the Member for Twickenham (Sir W. Joynson-Hicks), who moved this Amendment, did use the expression that evasion of a tax was a criminal act. I agree completely with the right hon. Member for Chelmsford (Mr. Pretyman) that that is an entirely inappropriate use of the word "criminal." Where a taxing Act provides that a tax is to be paid under certain conditions, a man who avoids those conditions is not committing a criminal act, but the Committee felt that there is a sort of sense of decency in regard to the amount of general burden that each person ought to bear, and that if he shifts an undue amount of his share on to other people's shoulders, it is not playing the game. That is the point of view from which we have been approaching this question all the way through, and it is the point of view from which Clause 14 is intended to be framed. Clause 14 proceeds broadly on this footing, that a firm has certain definite obligations of Super-tax if the incomes of the members of the firm exceed a certain limit. It is very easy to clothe that firm in the legal clothing of a company, and up to now that legal clothing has been an armour against Super-tax. It is in order to get round that clothing that the Clause is drawn. What is the ordinary procedure for the purpose of ascertaining the facts upon which an obligation to pay tax follows? The ordinary procedure that has been adopted for centuries past in this country is that it shall not be referred in the first instance to the courts of law, and for two reasons: First, that it is very desirable, in the interests of the individual citizens, that their income affairs should be kept secret and private, and if a matter goes to court everything becomes public; secondly, it is desirable that the process of collecting a tax should be as little expensive as possible, both to the Exchequer and to the taxpayer. If the case is to be referred to court, to a judge or to a judge and jury, as some hon. Members
have suggested, who is to pay the costs? Is the Exchequer to pay the costs in every case, and, if not in every case, in what case is it for the individual to pay the costs? It is not a practicable procedure, I venture to submit. It would mean a totally unnecessary employment of lawyers, a great deal of waste of money, great delay, with appeals possibly to the House of Lords, and, secondly, it would involve the disclosure of information that many people desire to keep private.
The Clause is framed in order strictly to follow the procedure which Parliament has for centuries past approved in regard to the assessment of taxation, namely, the system of leaving it to the Commissioners. If the Special Commissioners, in this case, think that on the facts within their knowledge there is a primâ facie case, they are to take certain steps. They are to send what is in effect a notice in writing, containing a direction that, for purposes of assessment to Super-tax, the income of a company is to be treated in a particular way. What follows? Hon. Members will find in the first Schedule of the Bill that when such a direction is given by the Special Commissioners, it is only a preliminary step, to initiate the proceedings, and that then a member of a company affected may appeal to the Special Commissioners and ask for them to investigate the case judicially. They are a judicial body, a body which, I believe, the great mass of the taxpayers of this country who have had to deal with them have found a very impartial body, and in their judicial capacity they make this investigation. The whole of the investigation is subject to all the careful machinery and precautions laid down in the Income Tax Act, 1918, which regulate the procedure. A further provision is that if either party, either the company or the Commissioners of Inland Revenue, are dissatisfied with the judicial decision of the Special Commissioners, either party may appeal to the Board of Referees, and then the same procedure will apply, with a power to state a case on any question of law. At each of those hearings the persons affected by the taxation will be heard—they will be able to present their case, they can appear by counsel, and there is nothing whatever to differentiate the hearings which are directed under this Clause from the hearings that take place for other general Income Tax purposes.
The Special Commissioners are made the body to decide these questions of fact, and there is no better tribunal to which, in my submission, those questions could be referred. The Board of Referees is composed of business men who have nothing whatever to do with taxing generally, presided over hitherto, as the Committee knows, by Sir Duncan Kerly, a lawyer of the greatest distinction and the greatest ability, and when on some future day he ceases to preside or does not preside over this Board, then some other competent and impartial person will take his place. The precautions laid down by way of machinery, for preventing any injustice being done or for preventing a decision which goes outside the spirit of the Clause and brings under tax companies that are not in the least intended by he Clause to be brought under tax, are so carefully framed that I venture to submit to the Committee—and I speak with some knowledge of these matters from my own personal experience—that the practical protection extended is far greater than hon. Members have seemed to assume.

Sir W. JOYNSON-HICKS: I think the explanation given by the learned Solicitor-General removes a very great many of the difficulties which were in my mind, but I should like to be clear on one particular point. Assuming, as I do assume, from what the Chancellor of the Exchequer has said, that the initial fact will have to be found that there is an attempt being made to evade the tax by forming a company, can a member of such company put his case before the Special Commissioners and the Board of Referees to have that question decided before the Special Commissioners come down and investigate the whole of the accounts?

Sir L. SCOTT: That is a very relevant question. The first thing to realise is that we must frame the words relating to evasion with care, and let me say at once, if I may, the sort of words which would commend themselves to me, without tying the Government to the precise words, of course. The sort of words I should like to put into the Clause are something like these:
Where it appears to the Special Commissioners that any company to which this Section applies has, for the purpose of avoiding the payment of tax by the persons who control the company.
What we want is, first, a neutral word like "avoiding," importing no moral obliquity, and, secondly, that the avoidance is avoidance by the persons who control the company. It is a question of Super-tax, but it is not a. Super-tax to be paid by the company but by those who control the company. That is the kind of Section we want to work in. What is it which, to an ordinary sensible man, such as any Member of this Committee, would appear to be evidence of an intention to avoid payment of tax? He would like to see where the company was formed, where it was started on its career, what proportion of money was being used in the trade, if it were a trade, whether the company was a trading company or not, the general management of it, the relation of it to the persons who control it, whether it was really being used for the purpose of running an independent business, and, if so, whether it was wholly used for that purpose, or only partly used for that purpose, whether the reserves that were being put aside would be the kind of reserves that anyone in control would be likely to put aside for a rainy year, or for purposes of extension or development—all those questions would be considered by any sensible Member of this Committee if he were asked this question, "Is that man trying to evade payment of his Super-tax or not?" That being so, it follows that the question whether there is an attempt to evade the payment of taxation or not is the last question you would put to yourself as the judge, and not the first. And you cannot answer that question until you have considered all the details of the case.

Sir W. JOYNSON-HICKS: I think, under the circumstances, my hon. and learned Friend has answered my point, and I ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Mr. HOLMES: I beg to move, in Subsection (1) to leave out the word "twenty-one," and to insert instead thereof the word "twenty-two."
The Chancellor of the Exchequer has already intimated that he will accept this, but, in view of certain opposition to my Amendment, I will explain what it means. The Clause we have been discussing as it now stands is to come into force for any accounting period ending
after the 5th April, 1921. This is retrospective taxation. It means that a company which has closed its accounts in the year ending 30th June, 1921, will now be subject to Super-tax for the amount in that year, although the auditors have given their certificate a year ago, and all outstanding taxation, which has to be dealt with nowadays by all auditors of such accounts, has been provided for. It is one of an auditor's greatest difficulties at the present time to calculate the amount to be kept in reserve for Income Tax, having regard to the fact that in the next two years the three years' average, or, in the case of colliery companies, the five years' average, is causing the amount which will come to be assessed for Income Tax to be far greater than the profits actually being made at the present time. That is, however, by the way. The proposal in the Clause as it stands is that we have to go back for the 12 months ending 30th June and 30th September, 1921, to tax companies under this Clause in a way which was not expected when the accounts were made up and the dividends allocated. The proposal I make is that we should make the first date of the accounting period end after the 5th April, 1922. Very few companies have made up their accounts for such an accounting period, and the auditors will be able to make proper reserve for the tax under this Clause. I hope the Committee will not be guilty of imposing retrospective taxation, which, I believe, is as distasteful to Members of the House, as it is to people outside.

Mr. MOSLEY: The effect of this Amendment, as I understand it, is to delay the operation of this Clause for the space of one year. My hon. Friend bases his case on the ground that the Clause as at present constituted imposes retrospective taxation. I do not think that is so. As the Committee is well aware, the Super-tax return is based upon the income of the preceding year. This Clause as it stands, as I read it, merely lays down that certain actions taken by companies during the year 1921–22 for the purpose of evading Super-tax during the current year 1922–23 shall not be allowed to stand. It is not retrospective taxation in that the Super-tax payable upon income of last year is paid in the present year. We are merely preventing the effect of action taken last year by these
companies depriving the Chancellor of the Exchequer of revenue which he should derive during the present year. It cannot be argued in any way that that is retrospective taxation, but, in any case, even if it were, there are many cases of-retrospective taxation in this very Bill which we are considering, and surely, if it be right to introduce this Clause in order to prevent a considerable loss to the revenue, it is proper that it should he immediately operative, and not be delayed for the period of the whole year during which the Chancellor of the Exchequer will lose this appreciable revenue which he has anticipated. The fact that the Chancellor of the Exchequer has introduced this Clause evidently means that a considerable amount of money is at stake. The proposal of my hon. Friend is to deprive the Exchequer of that sum of money for the period of a year. I submit that he has not substantiated his case that this Clause as it stands imposes retrospective taxation, and the loss of a whole year is a loss of revenue which at the present time we can ill afford.

Sir G. COLLINS: I was hoping the Chancellor of the Exchequer would inform the Committee of the amount of revenue which he would lose if this Amendment were accepted. If I understood him correctly during his speech on the Second Reading of this Clause, he said that he had a perfectly good defence for the insertion of 1921 in this Clause. My object in rising is to ask the Chancellor of the Exchequer whether he can give the Committee some figure as to the amount which the revenue will suffer if this Amendment be accepted. If I understand the Super-tax law correctly, it is this, that the income of an individual in 1921 is assessed for Super-tax in 1922, but it is not payable until the first two months of the coming year. Therefore, if this Amendment be carried, the Revenue will suffer some loss, and we hope the right hon. Gentleman will give us some figures on that point.

Sir R. HORNE: I think I indicated in my previous speech that there were considerations on both sides, and the question is just on which side you come down. I was originally moved by the views of the hon. Member for Harrow (Mr. Mosley) and his friends that Super-tax undoubtedly is based upon the previous year and not on the current year, but,
on the other hand, as the hon. Member for North East Derbyshire (Mr. Holmes) has said, all the books of companies have been made up and certified on the basis of the law as it then existed.

Mr. A. M. SAMUEL: And the money has been spent.

Sir R. HORNE: Yes. You may say that all forms of legislation may possibly have the effect of impinging upon past transactions, but I have been very much impressed in presenting this new legislation to the House by the great apprehension of Members as to the effect on business. I do not want to do anything at all to make business people more nervous than they otherwise would be, and, accordingly, I have expressed my intention to accept the Amendment of my hon. Friend the Member for North East Derbyshire. It is very difficult to tell what amount of money will be derived under this new legislation, especially at the start off. Once you have experience for a year you may be able to state something about the next year. At the present time we are proceeding very much in the dark, although we know there are a considerable number of companies which would appear to be entirely designed to avoid the Super-tax. We do not know the amount of money involved in these cases, but we would assume, so far as the present year is concerned, that we should get practically nothing, and that in the next year we should get £400,000. That, however, is only, as I say, a guess, but to that extent we should not get that £400,000 next year if we delayed this for a year. In one sense you do lose it.

Mr. RENDALL: In every sense.

Sir R. HORNE: I will admit in every sense, if you like. That is the position, and I have agreed to accept the Amendment which has been proposed.

Sir D. MACLEAN: I quite see the force of the position taken up by my hon. Friend the Member for North East Derbyshire (Mr. Holmes) in his Amendment, since it is based upon this, that the subject is entitled, especially in taxing questions, to take any legal means of, what he would call, protecting himself. He has done that, and he has done it legally. But the, Chancellor of the Exchequer says that that is not what this House intended by its measures for raising money from the
subject in this way, and that he, therefore, proposes to put a stop to it. I do not think—while I quite understand the position taken by the hon. Gentleman behind me—there is any objection at all in the State going to a subject and saying, "That is not what we intended legally, you are legally within your rights, but we proposed to protect a certain thing and we propose now to do that." The companies retort: "That is very unfair to us, we have distributed our dividends and there is a very considerable sum of money involved." I, therefore, think the right hon. Gentleman has not been well advised in throwing away a sum of between £200,000 and £400,000—it is quite impossible to estimate it accurately. At any rate it was a very substantial sum. I think what the Chancellor of the Exchequer ought to have done, and I have listened to what he had to say, was to stick to his guns.

Colonel Sir JAMES GREIG: May I ask the Chancellor of the Exchequer whether he will consider leaving this matter to the Committee and not putting on the Government Whips—leave the House to decide it as last year?

Lord R. CECIL: In respect to that appeal of the hon. and Gallant Gentleman, I think it would be rather hard to put on the Government Whips to force an alteration in a Government Bill. My own feeling is rather one of surprise that the Chancellor should give away £400,000 in a manner which does not appear to have any very great merit behind it.

Sir R. HORNE: I only gave it on condition that I got my Clause.

Lord R. CECIL: Is it really true that the supporters of the Government will not support this Clause unless this concession be made? Let me understand this aright. This Clause is only designed to touch companies formed for the purpose of doing what I think the Solicitor-General said was not quite fair, was not playing the game, or something to that effect. It is to deal with those companies and those alone. The question is whether the original proposal of the Chancellor to make this applicable from 5th April last year to 5th April this year is to be adopted. But surely the hard cases of which we have heard, and of which I
myself have heard, and the need for relieving those who are in great distress or difficulty being rejected by the Chancellor on the ground that he could not afford the money, is a contrast to giving over £400,000 in order to protect those who have not been playing the game!

Sir J. BUTCHER: I regret very much that the Chancellor of the Exchequer has been so generous, that he has given away £400,000 which he would have got in January or thereabouts, and which will not now be available until January, 1924, or thereabouts. Unless there are very urgent reasons, administrative or otherwise, I hope that the Chancellor will stick to the original proposal or, at any rate, as my hon. and gallant Friend has suggested, that be will leave it to the House to decide. I am much more inclined to speak as I do because we have heard the Chancellor from time to time, when we have put forward a request for certain relief and benefits for people in this country who are in the greatest straits and difficulties, old age pensioners and otherwise, and especially old Royal Irish Constabulary pensioners in Ireland, whose claims are not unreasonable, say that he has not the money to spend. These claims would not have required a great deal of money, but we have been told it was not there. Now the Chancellor is giving away £400,000 which he might have used more profitably if he had got it out of the pockets of these gentlemen who are said to be evading the tax, used it more profitably in the way I am suggesting. I do not go into the morals of the question. A man is entitled to evade a tax in any way that is legally possible. There is nothing immoral on the part of these people trying to evade taxation, but inasmuch as the House has come to the conclusion that that ought not to be allowed to go on, they are getting an unfair advantage over other taxpayers, and I hope the beneficial provisions of this Clause will be kept in the Clause.

Mr. A. M. SAMUEL: I endeavoured to express my views on this subject on the Second Reading of this Bill, but I am sorry to note the opposition of those hon. Members around me who have just spoken, the hon. Member for Harrow (Mr. Mosley), the Noble Lord the Member for Hitchin (Lord R. Cecil), and the hon.
Member for York (Sir J. Butcher), who have never in their lives spent a single day in trade, and know nothing whatever about it. You cannot rip open the year's accounts which are closed and get the money which has been spent. The thing suggested by the Government cannot be done. When I spoke upon the Clause, I pointed out such things as I thought were wrong, but we also gave considerable support to the Clause, thinking that the Chancellor of the Exchequer would meet us on various points. He met us on this point. He said he was going to put this date forward from 1921 to 1922. He knows as well as we do that for him to put into operation the Clause as it stands—notwithstanding all that has been said by certain hon. Members—so far as raising the £300,000 or £400,000, would be quite easy. But you can only do what you can do. Much of this money has been spent, and much of the outcry and opposition has been on the part of honest companies who have no intention whatever in the world of evading taxation. The opposition to this taxation will not be entirely removed when they feel that this hampering and troublesome Clause of 1921 has passed away, and that it has only been set aside till 1922. I hope those who are not engaged in business will give business men credit for being honest and decent men. We approve of the principle underlying this Clause, but we say it is utterly foolish to rip up balance-sheets which were settled 18 months ago. For that reason I hope the Chancellor will go to a Division. I shall certainly support him, on the score that he is doing the right thing.

Mr. RENDALL: I am not prepared to go to a Division without expressing my views. The defence of the Chancellor of the Exchequer—with great respect to him—struck me as the manner of an apologist ashamed of what he is doing. [HON. MEMBERS: "No!"]—and extremely alarmed at the criticism which fell upon him, for the House is wideawake, and I am glad it is. In the course of his speech he said that in one sense we are losing £400,000. I asked him what sense he meant, and he replied, "in every sense, if you like." What on earth did the right hon. Gentleman mean by saying losing in one sense? He might not have been trying, but he was successful in
deceiving the Committee. [HON. MEMBERS: "Oh!"] I say, not trying to do so, but succeeding in deceiving the Committee. He certainly deceived me—not intentionally.
We are having Amendments introduced, and we on this side of the House have a number down with case after case, and good cases, for relief from Income Tax. We have put them forward, but we have failed so far to convince the Chancellor that these Amendments ought to be made. The Clauses which are going to be presented, in my opinion, deal with harder cases than the one now put forward. I have a new Clause, for which, I believe, I have a large measure of support. The object of that Clause is to free widows from the taxation of certain small sums spent on the education of their children.

The DEPUTY-CHAIRMAN (Sir Edwin Cornwall): I am afraid that is a point beyond the scope of the present discussion.

Mr. RENDALL: With all submission, I was desirous of giving an instance of retrospective taxation, for the point is being made that this is not a fair proposal, because it is retrospective taxation. I was saying what I was by way of illustration. I was wishful to show that for the last three or four years war widows—for whose dependants, young children, there had been given special sums for education—have not paid Income Tax upon those sums, but by a mistake or something of the kind—a certain Royal Warrant coming into force, I think—these small sums are now taxed. I have a Clause down, which I hope will be accepted, freeing these from taxation, and I wanted to show that the Chancellor is in that case giving retrospective sanction. Certainly, we have here a different case altogether. My hon. Friend the Member for Farnham (Mr. A. M. Samuel) does not like to see the clerks and accountants making up their balance sheets afresh, nor does he wish to see the balance sheets ripped open. As a matter of fact, the hon. Gentleman knows as well as I do that Super-tax is paid out of next year's income. We all pay our Super-tax out of the income we earn in the year when we pay it. [HON. MEMBERS: "No!"] The ordinary individual is
going to pay Super-tax next year, and out of the income he earns next year. The private individual does that, and I think it will probably be the case with these private companies. These are not companies in the real sense of the term. They ought to be called "evasion companies." Why we should protect them after we have decided that they should not be allowed to do what they have done I do not know. Here is £400,000 to be given away simply because the Chancellor of the Exchequer makes some private arrangement—[HON. MEMBERS: "No, no!"]—I call it that—with certain Members of the House, to whom he says: "If you will accept certain Amendments I will give you other Amendments." It may be a legitimate arrangement, but it is made in a way which I think is not creditable to the House or the Committee. I personally detest this sort of arrangement, and I think we ought to have had the matter more fairly dealt with, for there is no reason for giving this £400,000 away. It could have been got. There are plenty of cases where relief ought to be given, but it ought not to be given here. For these reasons I trust that my hon. Friend will go to a Division.

8.0 P.M.

Sir W. JOYNSON-HICKS: The suggestion which has been made is that a private arrangement was made with the Government to give this concession, but it is nothing of the kind. This concession was asked for and discussed openly on the Second Reading when the Chancellor of the Exchequer announced that be would be prepared to make this concession, and there was nothing private about it. It was simply one of the ordinary Parliamentary bargains made across the Floor of the House, and I do not think we can now go behind that bargain. Many hon. Members accepted the Clause because of the concessions which were made, and for this reason they allowed the Clause to go through. If this bargain be not carried out, they will not have any opportunity now of voting against the Clause.

Lord R. CECIL: They can vote against the Motion, "That the Clause be added to the Bill."

Sir W. JOYNSON-HICKS: Many hon Members have gone away on the strength of the concessions made by the Chancellor of the Exchequer, and when they were
made no one got up and said they were improper concessions to make. Now some hon. Members seem to think that on this point they have got a nice party cry. The truth is there is something rather more important than that, and it is adhering to a Parliamentary bargain made across the Floor of the House. I hope the Chancellor of the Exchequer ill stand by his concession, put on the Government Whips, and carry this proposal.

Mr. LAWSON: If the Chancellor of the Exchequer had given us any reason for believing that there was anything in the argument set forth that there was some difficulty with the books, then there would have been some reason for reconsidering our position. As a matter of fact, the right hon. Gentleman did not believe there was any difficulty about the matter at all, and he did not take up that line of argument. With him it was simply a question on which side he would come down, and he came down on the side of the hon. Member who has just spoken.

Mr. HOLMES: This question does not affect the books at all. If it is shown that £5,000 had been distributed in dividends, and the company used the rest for developing the business, under this Clause a year after you could come to them and say, "We are going to demand from you in taxation some of the money which you have spent."

Mr. LAWSON: The Chancellor of the Exchequer himself did not give the slightest heed to the argument on those grounds. Some of us on the Labour benches may not have been in trade, but

we come in contact with those who are engaged in industrial concerns. While we may not have been engaged in trade, we have been present when discussions have taken place on the Finance Bill. One of the things that has struck me is that the Chancellor of the Exchequer is giving colour to the argument freely used outside that this is a rich man's Budget. I remember when we were pleading for a certain concession which it was said would cost £180,000, the Chancellor of the Exchequer said he quite agreed with our object and had great sympathy with it, but he could not accept our proposal, because he must get his money somehow. Now he comes forward, and without any argument whatever in favour of it, he accepts an Amendment which means a loss of something like £400,000 to the Exchequer. That is only one of the many concessions which he has made to the same interests in this House. In face of the fact that he has not given way a single inch to representatives in this House who are putting forward economies which he says he, agrees with but cannot afford, I put it to him that it is about time that he began to keep a stiff back to some of these interests, and he should give some consideration to Amendments which have more substance in them. If we go to a Division, we on the Labour Benches as a body will oppose this Amendment, because we believe it is a flagrant illustration of the belief which is prevalent outside that this is a rich man's Budget.

Question put, "That the word 'twenty-one' stand part of the Clause."

The Committee divided: Ayes, 59; Noes, 244

Division No. 177.]
AYES.
[8.9 p.m


Adamson, Rt. Hon. William
Grundy, T, W.
Parkinson, John Allen (Wigan)


Banton, George
Guest, J. (York, W. R., Hemsworth)
Raffan, Peter Wilson


Barker, G. (Monmouth, Abertillery)
Hall, F. (York, W.R., Normanton)
Rendall, Athelstan


Barnes, Major H. (Newcastle, E.)
Hallas, Eldred
Richardson, R. (Houghton-le-Spring)


Barton, Sir William (Oldham)
Hartshorn, Vernon
Rose, Frank H.


Benn, Captain Wedgwood (Leith)
Hayday, Arthur
Sexton, James


Bowerman, Rt. Hon. Charles W.
Hayward, Evan
Short, Alfred (Wednesbury)


Bramsdon, Sir Thomas
Hirst, G. H.
Sitch, Charles H.


Briant, Frank
Hogge, James Myles
Swan, J. E.


Bromfield, William
Irving, Dan
Thomas, Brig.-Gen. Sir O. (Anglesey)


Cairns, John
John, William (Rhondda, West)
Thomson, T. (Middlesbrough, West)


Carter, W. (Nottingham, Mansfield)
Jones, Morgan (Caerphilly)
Walsh, Stephen (Lancaster, Ince)


Cecil, Rt. Hon. Lord R. (Hitchin)
Kenyon, Barnet
Watts-Morgan, Lieut.-Col. D.


Collins, Sir Godfrey (Greenock)
Lambert, Rt. Hon. George
White, Charles F. (Derby, Western)


Davies, A. (Lancaster, Clitheroe)
Lunn, William
Wignall, James


Edwards, C. (Monmouth, Bedwellty)
Maclean, Rt. Hn. Sir D. (Midlothian)
Wilson, Rt. Hon. J. W. (Stourbridge)


Finney, Samuel
McMicking, Major Gilbert
Wood, Major M. M. (Aberdeen, C.)


Foot, Isaac
Murray, Dr. D. (Inverness & Ross)



France, Gerald Ashburner
Myers, Thomas
TELLERS FOR THE AYES.—


Galbraith, Samuel
Newbould, Alfred Ernest
Mr. Lawson and Mr. Mosley.


Gillis, William
O'Grady, Captain James



NOES.


Adkins, Sir William Ryland Dent
Green, Joseph F. (Leicester, W.)
Norton-Griffiths, Lieut.-Col. Sir John


Ainsworth, Captain Charles
Greene, Lt.-Col. Sir W. (Hack'y, N.)
Parker, James


Armitage, Robert
Greenwood, Rt. Hon. Sir Hamar
Parry, Lieut.-Colonel Thomas Henry


Ashley, Colonel Wilfrid W.
Greer, Sir Harry
Pearce, Sir William


Astbury, Lieut.-Com. Frederick W.
Gregory, Holman
Pease, Rt. Hon. Herbert Pike


Astor, Viscountess
Gritten, W. G. Howard
Perring, William George


Atkey, A. R.
Guest, Capt. Rt. Hon. Frederick E.
Phillpps, Gen. Sir J. (Southampton)


Baird, Sir John Lawrence
Hall, Lieut.-Col. Sir F (Dulwich)
Phillpps, Sir Owen C. (Chester, City)


Baldwin, Rt. Hon. Stanley
Hamilton, Sir George C.
Pickering, Colonel Emil W.


Balfour, George (Hampstead)
Hannon, Patrick Joseph Henry
Pilditch, Sir Philip


Banner, Sir John S. Harmood-
Harmsworth, C. B. (Bedford, Luton)
Pinkham, Lieut.-Colonel Charles


Barlow, Sir Montague
Harmsworth, Hon. E. C. (Kent)
Pollock, Rt. Hon. Sir Ernest Murray


Barnes, Rt. Hon. G. (Glas., Gorbal[...])
Haslam, Lewis
Pownall, Lieut.-Colonel Assheton


Barnett, Major Richard W.
Henderson, Lt.-Col. V. L. (Tradeston)
Pratt, John William


Barnston, Major Harry
Herbert, Dennis (Hertford, Watford)
Pretyman, Rt. Hon. Ernest G.


Barrand, A. R.
Hills, Major John Waller
Purchase, H. G.


Barrie, Sir Charles Coupar (Banff)
Hinds, John
Rae, Sir Henry N.


Bartley-Denniss, Sir Edmund Robert
Holbrook, Sir Arthur Richard
Ratcliffe, Henry Butler


Beck, Sir Arthur Cecil
Holmes, J. Stanley
Remnant, Sir James


Bell, Lieut.-Col. W. C. H. (Devizes)
Hood, Sir Joseph
Renwick, Sir George


Benn, Sir A. S. (Plymouth, Drake)
Hope, Sir H. (Stirling &, Cl'ckm'nn, W.)
Richardson, Sir Alex, (Gravesend)


Betterton, Henry B.
Hope, Lt.-Col. Sir J. A. (Midlothlan)
Richardson, Lt.-Col. Sir P. (Chertsey)


Bigland, Alfred
Hopkins, John W. W.
Roberts, Rt. Hon. G. H. (Norwich)


Bird, Sir R. B. (Wolverhampton, W.)
Hopkinson, A. (Lancaster, Mossley)
Roberts, Samuel (Hereford, Hereford)


Blair, Sir Reginald
Horne, Edgar (Surrey, Guildford)
Robinson, S. (Brecon and Radnor)


Blake, Sir Francis Douglas
Horne, Sir R. S. (Glasgow, Hillhead)
Robinson, Sir T. (Lancs., Stretford)


Blane, T. A.
Howard, Major S. G.
Rutherford, Sir W. W. (Edge Hill)


Boscawen, Rt. Hon. Sir A. Griffith-
Hunter-Weston, Lt.-Gen. Sir Aylmer
Samuel, A. M. (Surrey, Farnham)


Bowyer, Captain G. W. E.
Hurd, Percy A.
Samuel, Samuel (W'dsworth, Putney)


Brassey, H. L. C.
Hurst, Lieut.-Colonel Gerald B.
Sanders, Colonel Sir Robert Arthur


Breese, Major Charles E.
Inskip, Thomas Walker H.
Sassoon, Sir Philip Albert Gustave D.


Bridgeman, Rt. Hon. William Clive
Jackson, Lieut.-Colonel Hon. F. S.
Scott, A. M. (Glasgow, Bridgeton)


Briggs, Harold
James, Lieut.-Colonel Hon. Cuthbert
Scott, Sir Leslie (Liverp'l, Exchange)


Britton, G. B.
Jodrell, Neville Paul
Seddon, J. A.


Broad, Thomas Tucker
Johnson, Sir Stanley
Shaw, Hon. Alex. (Kilmarnock)


Brotherton, Colonel Sir Edward A.
Jones, Sir Edgar R. (Merthyr Tydvil)
Shaw, William T. (Forfar)


Bruton, Sir James
Jones, G. W. H. (Stoke Newington)
Shortt, Rt. Hon, E. (N'castle-on-T.)


Buckley, Lieut.-Colonel A.
Jones, Henry Haydn (Merioneth)
Simm, M. T.


Campion, Lieut.-Colonel W. R.
Jones, J. T. (Carmarthen, Lianelly
Smith, Sir Harold (Warrington)


Carter, R. A. D. (Man., Withington)
Joynson-Hicks, Sir William
Stanley, Major Hon. G. (Preston)


Casey, T. W.
Kellaway, Rt. Hon. Fredk. George
Stanton, Charles Butt


Cautley, Henry Strother
Kelley, Major Fred (Rotherham)
Stephenson, Lieut.-Colonel H. K.


Child, Brigadier-General Sir Hill
Kidd, James
Stevens, Marshall


Churchman, Sir Arthur
King, Captain Henry Douglas
Strauss, Edward Anthony


Clough, Sir Robert
Larmor, Sir Joseph
Sturrock, J. Leng


Cockerill, Brigadler-General G. K.
Law, Alfred J. (Rochdale)
Sugden, W. H.


Cohen, Major J. Brunel
Law, Rt. Hon. A. B. (Glasgow, C.)
Surtees, Brigadier-General H. C.


Colfox, Major Wm. Phillips
Lewis, Rt. Hon. J. H. (Univ., Wales)
Sutherland, Sir William


Colvin, Brig.-General Richard Beale
Lewis, T. A. (Glam., Pontypridd)
Sykes, Sir Charles (Huddersfield)


Cope, Major William
Lloyd, George Butler
Taylor, J.


Cory, Sir C. J. (Cornwall, St. Ives)
Locker-Lampson, G. (Wood Green)
Thomas, Sir Robert J. (Wrexham)


Dalziel, Sir D. (Lambeth, Brixton)
Lorden, John William
Thomson, F. C. (Aberdeen, South)


Davies, Alfred Thomas (Lincoln)
Lort-Williams, J.
Thomson, Sir W. Mitchell- (Maryhill)


Davies, Thomas (Cirencester)
Lyle-Samuel, Alexander
Townley, Maximilian G


Davies, Sir William H. (Bristol, S.)
Mackinder, Sir H. J. (Camlachie)
Tryon, Major George Clement


Davison, Sir W. H. (Kensington, S.)
McLaren, Hon. H. D. (Leicester)
Wallace, J.


Dawson, Sir Philip
McLaren, Robert (Lanark, Northern)
Walters, Rt. Hon. Sir John Tudor


Dean, Commander P. T.
Macleod, J. Mackintosh
Walton, J. (York, W. R., Don Valley)


Dewhurst, Lieut.-Commander Harry
McNeill, Ronald (Kent, Canterbury)
Ward, Col. [...]. (Stoke-upon-Trent)


Dockrell, Sir Maurice
Macpherson, Rt. Hon. James I.
Ward, Col. L. (Kingston-upon-Hull)


Doyle, N. Grattan
Macquisten, F. A.
Ward, William Dudley (Southampton)


Du Pre, Colonel William Baring
Mallalieu, Frederick William
Waring, Major Walter


Edgar, Clifford B.
Manville, Edward
Watson, Captain John Bertrand


Edge, Captain Sir William
Martin, A. E.
Weston, Colonel John Wakefield


Edwards, Major J. (Aberavon)
Middlebrook, Sir William
Wheler, Col. Granvil[...], C. H.


Evans, Ernest
Mitchell, Sir William Lane
White, Col. G. D. (Southport)


Falls, Major Sir Bertram Godfray
Molson, Major John Elsdale
Williams, Aneurin (Durham, Consett)


Fell, Sir Arthur
Mond, Rt. Hon. Sir Alfred Moritz
Williams, C. (Tavistock)


Flannery, Sir James Fortescue
Morden, Col. W. Grant
Williams, Col. P. (Middlesbrough, E.)


Forestier-Walker, L.
Moreing, Captain Algernon H.
Windsor, Viscount


Forrest, Walter
Morrison-Bell, Major A. C.
Winterton, Earl


Fraser, Major Sir Keith
Munro, Rt. Hon. Robert
Wise, Frederick


Fremantle, Lieut.-Colonel Francis E.
Murchison, C. K.
Wood, Hon. Edward F. L. (Ripon)


Ganzoni, Sir John
Murray, John (Leeds, West)
Wood, Sir H. K. (Woolwich, West)


Gardner, Ernest
Nall, Major Joseph
Wood, Sir J. (Stalybridge & Hyde)


Gee, Captain Robert
Neal, Arthur
Worsfold, T. Cato


George, Rt. Hon. David Lloyd
Newman, Sir R. H. S. D. L. (Exeter)
Worthington-Evans, Rt. Hon. Sir L.


Gibbs, Colonel George Abraham
Newton, Sir Percy Wilson
Yeo, Sir Alfred William


Gilbert, James Daniel
Newton, Sir D. G. C. (Cambridge)
Younger, Sir George


Gilmour, Lieut.-Colonel Sir John
Nicholson, Brig.-Gen. J. (Westminster)



Goff, Sir R. Park
Nicholson, Reginald (Doncaster)
TELLERS FOR THE NOES.—


Gould, James C.
Nield, Sir Herbert
Colonel Leslie Wilson and Mr.


Gray, Major Ernest (Accrington)
Norris, Colonel Sir Henry G.
McCurdy.


Question put, and agreed to.

The CHAIRMAN: The next Amendment in the name of the hon. Member for Farnham (Mr. A. M. Samuel) is one of a series and—

Sir W. JOYNSON-HICKS: Before that be taken, may I move, in Sub-section (1), to leave out the words "actual income" ["part of its actual income from all sources"] and to insert instead thereof the words "net profits and gains"? This follows the wording of the Income Tax Act, 1918.

The CHAIRMAN: The first Amendment of the hon. Member for Farnham comes before that.

Mr. A. M. SAMUEL: I am quite willing to give way to the hon. Member for Twickenham. The Amendment which stands in my name is one of a series, and the first could be put in conjunction with the second.

Sir W. JOYNSON-HICKS: Mine is a purely verbal Amendment. The words "profits and gains" are the words always used in the Income Tax Acts where the taxation is on the income of a business. It is only in the case of the Super-tax that you get taxation on the total income of the individual which may consist of profits and gains from a business, of income from shares and of the value of landed property.

The CHAIRMAN: In order to make his Amendments read, the hon. Member for Farnham will have to move it as it appears on the Paper. I will take care in putting the question to save the Amendment of the hon. Member for Twickenham.

Mr. SAMUEL: I beg to move, in Subsection (1), to leave out the words
in such manner as to render the amount distributed liable to be included in the statements to be made by the members of the company of their total income for the purposes of Super-tax.
What I desired was that my two Amendments might be taken together, because they dovetail into each other, but as that is not in order, I move this first Amendment, the object of which is to clarify the Clause and not in any way to destroy its meaning. If we leave out these words, then a little later I want to paraphrase them so as to make the mean-
ing more clear, and to put them in after the word "period" ["said year or other period"] in this form:
in such manner as to render the amount withheld from distribution not hitherto liable to be included in the statements made by the members of the company of their total income for the purposes of Super-tax.
As the words now stand in the Clause the term "distributed" is used, but they are not distributed. They are withheld from distribution. I therefore suggest we should recast these words and put them in in the form I will in due course propose. Then I want next to insert, after the word "said" ["the said income of the company"], the word "undistributed." Some of these are drafting Amendments and are not intended to upset the Clause.

The CHAIRMAN: It is not necessary to recite each Amendment, unless the hon. Member wishes to do so. What I suggest is that he develops his whole alternative plan on this first Amendment. Of course, if the first Amendment be rejected, the others would fall too. I should only put the first.

Mr. SAMUEL: As it is quite plain as it, stands on the Paper, I do not want to weary the Committee by dealing with it further. These words have been carefully thought out by those who have helped me in this matter, and their only object is to clarify the Clause, the drafting of which seems to be open to several alternative meanings.

Sir R. HORNE: I gather from my hon. Friend that this is a pure question of drafting, and not one on which he takes exception to the principle which I am endeavouring to follow. I confess I do not entirely share his critical attitude towards the words which have been used, and which, indeed, have been discussed very carefully between the Inland Revenue Department and the Parliamentary draftsman. If, however, my hon. Friend will allow me, I will promise to go into these words again, and if any difficulty is found in regard to them, and it is considered that my hon. Friend's words would be better, I shall frankly confess it. At the moment I do not share his view. It seems to me that there is no difficulty in saying, as we say here, that
Where it appears to the Special Commissioners that any company … has
not … distributed … in such a manner as to render the amount distributed liable to be included in the statements made by the members of the company …
It means that the amount is not distributed so as to render it liable to Super-tax. I think it is really quite clear. I do not, however, dismiss my hon. Friend's suggestion summarily, and if we come to the conclusion that his words are clearer, I shall be quite frank in saying so.

Mr. SAMUEL: I do not say that my way is better, but I do not understand the meaning of the words as they stand, nor do those who think with me. It is the amount withheld from distribution; it is not a fact that it is distributed. However, I am perfectly content on the assurance of my right hon. Friend that he will discuss the Clause with his draftsman in the light of what I have said, and, if he will try to put it right, I shall be quite content to leave it at that.

Amendment negatived.

Mr. HOLMES: I beg to move, in Subsection (1), after the word "Commissioners" ["the Commissioners shall have regard"], to insert the words
shall not take into consideration any amount brought forward from any preceding year or other period, and".
Perhaps I may give an example to show what I mean. If a company makes £10,000 and distributes £5,000, the Special Commissioners may say that it is reasonable that the other £5,000 shall be retained in reserve, and that it will not be taxed to Super-tax. But they may say, "You have distributed £5,000, but you have an accumulated fund of about £20,000, and the £5,000 that you have distributed was out of your accumulated reserve. You have actually this year made £10,000, and have not paid any dividend at all." The object of my Amendment is to ensure that every case shall be judged on its merits, having regard to the amount earned, the amount distributed, and the amount put to reserve, and that consideration shall not be given to any amount brought forward from previous years, which was really an accumulated reserve.

Sir R. HORNE: Personally, I agree with the general idea which the hon. Member has expressed, and I entirely
assent to his view that you must take each year upon its merits. If this Amendment, as I understand it, be adopted, however, a company might find itself in an awkward position. The amount brought forward from any preceding year is a matter of importance in deciding what may reasonably he distributed, and how much may be put to reserve, and if you are going to rule out amounts brought forward from one year to another, you must also rule out losses which you have sustained in past years. I should really prefer that the matter be left as it stands in the Clause. I agree that the persons examining the case should take into account the factors to which my hon. Friend refers, but if this Amendment were passed as it stands it might lead to a very unfair situation. Accordingly, I would ask my hon. Friend to be so good as not to press it.

Mr. SAMUEL: I think we should take into consideration the fact that some people bring forward their reserves while others are not so prudent—and we want to encourage prudence as much as possible—and distribute these moneys in the form of bonus shares, and that, consequently, those people who have received bonus Shares are put in a much better position than when the money has been carried over and has become subject, to this taxation.

Sir R. HORNE: I should not have thought that. I should have thought that a person who had distributed bonus shares was better off than anyone who held reserves, but I should not regard as reserves money brought forward in the ordinary sense.

Mr. SAMUEL: I mean the carry-forward—the undivided profits carried forward in the accounts to make provision for a rainy day. Super-tax may be charged upon that, but it is not charged upon people with bonus shares. Of-course, the people who use that carry-forward by capitalising it in bonus shares will not then be subjected to Super-tax in respect of it, and will be in a much better, though an unfair, position vis-à-vis the people who have carried the money forward.

Mr. D. HERBERT: I do not know whether my hon. Friends opposite have considered the meaning of the words "a reasonable part of its actual income from
all sources for the said year or other period." That seems to me to cover the point of the Amendment.

Mr. HOLMES: The point is whether the distribution made during the year is intended to be considered as having been made out of that year's income. I do not want to go any further, after what the Chancellor has said.

The CHAIRMAN: Does the hon. Member ask leave to withdraw the Amendment?

Mr. HOLMES: No, Sir, I do not wish to withdraw it.

Amendment negatived.

Mr. SAMUEL: I beg to move, in Subsection (1), after the word "may" ["such other requirements as may be necessary"], to insert the word "reasonably."
I do not think that this needs any explanation.

Sir R. HORNE: After what I have said, I hope my hon. Friend will agree that this Amendment is not necessary, and that he will not press it.

Mr. SAMUEL: I agree. I think I was wrong to move the Amendment, and that I had better ask leave to withdraw it.

Amendment, by leave, withdrawn.

Mr. D. HERBERT: I beg to move, in Sub-section (1), after the word "necessary" ["such other requirements as may be necessary"], to insert the words "or advisable."
My intention in moving this Amendment is the same as that of my hon. Friend in regard to the last Amendment, and I hope that the Chancellor of the Exchequer will see no objection to it.

Sir R. HORNE: I would ask my hon. Friend not to press it.

Mr. HERBERT: I do not wish to press the Chancellor, but I do not quite see the objection to it. It does seem to me that requirements which are advisable are very much wider than requirements which are necessary, and the whole trend of what the Chancellor has told us to-day has been that he does not want to interfere with what is reasonably necessary or advisable in the interest of the business.

Sir R. HORNE: If my hon. Friend thinks these words will improve the situation I shall be glad to accept them.

Amendment agreed to.

Mr. D. HERBERT: I beg to move, at the end of Sub-section (1), to insert the words,
and any income used or reasonably intended to be used for the purpose of the business of the company shall be deemed to be reasonably withheld from distribution.
The object is to provide that any income which is actually used for the purpose of the business shall not be held to be income which is unreasonably withheld.

Sir L. SCOTT: I ask the hon. Member to accept the assurance from me, of which I feel no doubt whatever, that the import of these words is already contained in the Clause as drafted and they really add nothing to it. I accept absolutely the criterion implied by the Amendment and merely say that that criterion is already contained in the Clause as drafted and the words are unnecessary.

Mr. HERBERT: I ask leave to withdraw the Amendment and I will further consider what the Solicitor-General has said before Report.

Amendment, by leave, withdrawn.

Mr. SAMUEL: I beg to move, in Sub-section (2), after the word "the" ["amount of the income"], to insert the word "undistributed."
I move this merely for the purpose of clarity. I want the Chancellor to do what he can to avoid any trouble later on as to ambiguity about this Clause.

Sir L. SCOTT: I do not think, even as a matter of grammar, the word "undistributed" can go in here. What the hon. Member means is that the tax shall apply only to such portion of the income as has in fact been distributed to shareholders. That, I think, is already provided for. The principle is obviously consistent with the Clause. Perhaps he will withdraw it now, and we will look into it as a matter of drafting.

Amendment, by leave, withdrawn.

Mr. SAMUEL: I beg to move, in Subsection (3), after the word "is" ["whichever is later"], to insert the word "the."
There again we find ambiguity. It is better to put in "whichever is the later date of the two."

Sir R. HORNE: It is a mere matter of drafting.

Amendment, by leave, withdrawn.

Mr. HOLMES: I beg to move, at the end of Sub-section (4), to insert the words
An amount equal to five per cent. upon any sum which shall be assessed and in respect of which Super-tax has been paid under this Section shall be repaid to the company out of the amount of Corporation Profits Tax paid by such company.
This is intended to carry out what the Chancellor has promised, that a company will not be liable to Super-tax and Corporation Profits Tax on the same sum.

Sir R. HORNE: If the hon. Member will withdraw his Amendment I will put down a Clause on the Report stage.

Sir G. COLLINS: Can the Chancellor of the Exchequer give some figure as to what loss of revenue will accrue to the State through the acceptance of this Amendment?

Sir R. HORNE: I cannot give any particular figure, but I should expect it to be comparatively small.

Amendment, by leave, withdrawn.

Mr. HOLMES: I beg to move, at the end of Sub-section (4), to add the words
The directors of any company which is carrying on a bonâ fide trading business may, in respect of any year or other period, if they so elect, make a declaration under the Statutory Declaration Act, 1835, and submit the same to the auditor of the company, being a member of the Institute of Chartered Accountants or the Society of Incorporated Accountants and Auditors, or an accountant approved by the Board of Trade, as to the amount which they regard as necessary to be retained in the business out of the income of that year or other period, and as to the amount (if any) which they propose to recommend to the shareholders for distribution, setting out the reasons for such retention, and if such auditor is satisfied that a primâ facie case is made out by such declaration that such proposed distribution (if any) would he a reasonable proportion of the income for such year or other period for the purposes of this Section, he may so certify, and such certificate shall he conclusive, subject to an appeal by the Commissioners of Inland Revenue to the Board of Referees. Provided that no company whose directors shall not think fit to make such declaration shall in any manner he prejudiced by the absence of any such certificate as aforesaid.
I have mentioned this matter before. I move it formally in order to get it on the records.

Sir R. HORNE: I have already said something upon the subject of this Amendment. I said I was willing to accept a Sub-section on these lines. I have since made investigations, and the result has been that it would be a somewhat invidious task, in fact, too much for an auditor, to give a certificate which should be regarded as conclusive as to whether a company was properly managing its business in so far as the distribution of its profits was concerned. That was strongly brought to my notice, and I was bound to give consideration to that fact. On the other hand, it is plain also that if the Commissioners of Inland Revenue were to be entitled to take an appeal, they must have some information on which to take it, otherwise they would be in really a somewhat false position. Accordingly, I came to the conclusion that it should not take the precise form in which the hon. Member has put it in his Amendment. I am prepared to bring up an Amendment on the Report, carrying out the main idea, which is to put an auditor in the position of giving a primâ facie certificate which will enable the Special Commissioners to leave the matter there and go no further. On the-other hand, if they have grounds for thinking that there was something more-behind the auditor's certificate and something behind the statutory declaration of the directors of the company, under those circumstances the Commissioners would be empowered to investigate the matter and go forward upon the same line as that upon which the Clause was previously constructed, and for which the Schedule provides. Accordingly, if my hon. Friend will withdraw the Amendment, I shall present to the House an Amendment on similar lines on the Report stage.

Amendment, by leave, withdrawn.

Mr. HOLMES: I beg to move, in Subsection (5, a), to leave out the word "nine," and to insert instead thereof the word "fourteen."
The Clause, as it now stands, applies to any company registered after 5th April, 1909, and I desire to make it applicable to any company registered after the 5th April, 1914. The object of the Clause is to catch the tax-dodgers, those individuals who have turned themselves into limited companies for the purpose of avoiding Super-tax. It was
not until the high taxation, caused by the War, that this became a general practice. In order to prevent private companies, which have nothing whatever to do with this matter, from being subject to the inquisition of going before the Special Commissioners, I beg to move the insertion of "fourteen."

Sir L. SCOTT: As the Chancellor of the Exchequer said at an earlier stage this afternoon, he is prepared to accept this Amendment, with its corollary, which has been suggested from certain quarters, that we must deal with some companies registered earlier, where they are, so to speak, bought up for the purpose of doing the very thing which this Clause is intended to prevent. The words which are necessary, to carry out that promise given by my right hon. Friend, will be considered between now and the Report stage, and, subject to that Amendment being put as part of the acceptance of the Amendment now before the Committee, we shall be glad to accept the present Amendment.

Amendment agreed to.

Mr. D. HERBERT: I beg to move, in Sub-section (5, a) after "1917," to insert the words:
and is not a reconstruction of a company registered before the fifth day of April, nineteen hundred and fourteen.
This is a manuscript Amendment to clear up a point, and to bring in a company which may, for technical reasons, fail to come with paragraph (a), as a company registered before the 5th April 1914, as that paragraph has now been amended. This Amendment affects what is commonly known as a reconstructed company. If that reconstructed company is registered after the date provided in paragraph (a), it ought not to lose the benefit, seeing that it originally started its business at an earlier period, and has simply gone through the process of reconstruction, but is really the same business in all ways as the business which was registered prior to 1914.

Sir L. SCOTT: I am not quite sure that this is a convenient place in which to insert this Amendment, or that the Amendment can be accepted in this form. It is carrying out, in effect, the spirit of the undertaking already given by the Chancellor of Exchequer, and if the hon.
Member will be good enough to ask the leave of the Committee to withdraw the Amendment, the purport of it shall be considered and incorporated in the Clause which the Chancellor of Exchequer has promised to bring up on the Report stage.

Mr. HERBERT: I am very pleased to beg the leave of the Committee to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. HERBERT: I beg to move at the end of Sub-section (5, d) to insert a new paragraph:
(e) The net profit of which for the last completed year of its accounts was not over one thousand pounds.
I have moved this manuscript Amendment as a result of what the Chancellor of Exchequer said in introducing this Clause on the Second Reading. He said that there was a considerable number of these companies whose total income was under £1,000, or not over £1,000, and I think he said that, obviously, it would not he necessary to go into these cases. If that is the feeling, I do think it would relieve these small companies of a good deal of anxiety, and would relieve them of the possibility of having the perhaps unwelcome attentions of the Commissioners, if it was expressly stated in this Clause that the Clause does not apply to companies whose net profits for the year in question was not more than £1,000

Sir L. SCOTT: There may be companies which would come within the net of this Clause who are evading payment of duty to a very small extent. There may be others who are evading it to a very great extent. So far as I understand it, the Mover of this Amendment proposes to limit the operations of the Clause to those who are evading payment to a small extent, and to allow those who are evading payment to a great extent to evade the Clause altogether. I do not think that is quite the intention of the Clause, or of the hon. Member; but the effect of the words which he has proposed would, I think, do what I have suggested. I have heard a sin excused from time to time on the ground that it is a very small sin, but I have never heard a sin excused on the ground that it is a very big sin, which, apparently, is what my hon. Friend desires to do by this Amendment. I would ask him to withdraw the Amendment in order that we may consider the words, and per-
haps he will take the opportunity of discussing the matter with me before the Report stage. I think there must be some misapprehension.

Mr. HERBERT: I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. HERBERT: I beg to move, in Subsection (5), to leave out the words "not a beneficial owner" and to insert instead thereof the words "trustee or nominee for or on behalf of any shareholder of the company."
The Clause says:
In computing the number of shareholders of a company there shall be excluded any shareholder who is not a beneficial owner of shares.
Obviously, that is intended to hit the man who, not being a beneficial owner of shares, is either a trustee or nominee for the person you want to get at, namely, one of the principal shareholders of the company. Surely it is a common case to have shareholders of a registered company who are not beneficially interested, because they are trustees, perfectly genuine trustees of a settlement or of a will, for the benefit of some person who is not himself a shareholder in the company, and is not otherwise interested in the company in any way. It seems to me obvious that if you are going to rope in, as the nominees, so to speak, of the man you want to get at, a person who is simply trustee for some widow or children, whom this man you want to get at has never heard of, there must be an error in the drafting. Therefore I propose this Amendment.

Sir L. SCOTT: I think that this Amendment is based on a failure to appreciate the whole of the drafting of the Clause from the beginning to the end of paragraph (d). The scheme of the Clause is to disregard people who are not beneficial owners, in the sense of people who have not a real interest in the earning of the company. We want to get at those persons in whose interest the company is being run, and who effectively control it as a mere cloak or machinery for their own operations, and we thought that the phrase "not a beneficial owner" was a good way of describing them. The objection to the words suggested in their place is that it may be that a man who is in control, and his estate devolves upon
trustees of whom there may be more than one, and that therefore there are on the register shareholders who are, in the words of the Amendment, trustees. We do not want to say that they are not to be computed. We want to say that the trust as an entity shall be substituted for the man who has died, and counted as one, and we do that by the insertion towards the end of the words:
Persons in partnership and persons interested in the estate of a deceased person or in property held on a trust shall respectively be deemed to be a single person.
The trust, therefore, composed of the trustees, would in that case be treated as one person. I would ask my hon. Friend to consider whether, after that explanation, he will withdraw his proposal.

9.0 P.M.

Mr. HERBERT: The point which the Solicitor-General has raised makes me think that there is substantial objection to the words which I have proposed. At the same time, I do think that I have called attention to a weakness in the Clause which should be met in some way or other. I will ask the Solicitor-General to consider this case. You might get a company, say, with 150 shareholders. A hundred of them might be trustees, and the other 50 might be shareholders who would be either controllers of the company or nominees of the controller. Therefore I should be glad to ask leave to withdraw the Amendment if the Solicitor-General will be good enough to consider that point and see whether amendment is required in the drafting in order to prevent being roped in, under these words, the man who is trustee for some person entirely outside of, and apart from, the person who is controlling or assisting the control of the company.

Amendment, by leave, withdrawn.

Mr. A. M. SAMUEL: In view of what has taken place in the earlier part of the evening I do not move the Amendment which I have put on the Paper to leave out Sub-section (8).

Sir NORMAN RAE: I beg to move, in Sub-section (8), to leave out "1922–23," and to insert instead thereof "1923–24."

This is a consequential Amendment.

Mr. A. SHAW: I would like to hear what the Solicitor-General has to say about this, as I am not sure at the
moment that, this Amendment is a necessary consequence of the Amendment which has been already made.

Sir L. SCOTT: Yes, I think that it is purely a drafting Amendment.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, be added to the Bill."

Mr. HERBERT: I may be forgiven for expressing again my deep appreciation of the way in which the Chancellor of the Exchequer and the Solicitor-General have tried to meet the objections to this Clause. I am still an unrepentant opponent of this Clause for the reason that I believe more than ever, now that the Chancellor has tried to meet us so much, he will have relieved those companies which we want to protect, and the only companies left that will be caught by this Clause will be those that we want to catch, and that will not have the slightest hesitation about going out of the country and therefore getting out of the Clause, or adding 50 members to whom they can give a £1 share apiece in order to put the company outside the Clause. Therefore, I still hope that the Chancellor of the Exchequer, before the Report stage, will consider seriously whether he is not likely to lose on the Income Tax which he will fail to receive owing to these companies going abroad more than he will get from the Super-tax to be recovered under this Clause.

Sir L. SCOTT: I want the Committee to look upon this Clause in this sense. We have taken a pair of compasses, and described a circle with a comparatively small radius. No doubt we shall find in the course of the application of the Clause certain companies here and there beyond the edge of the circle, and it may be necessary to come back to Parliament next year and ask Parliament to allow us to extend the radius slightly. But it is better not to attempt too much at first.

NEW CLAUSE.—(Amendment of 10 and 11 Geo. V., c. 18, s. 16.)

Section sixteen of the Finance Act, 1920 (which provides allowance in respect of earned income), shall have effect as if for the word "one-tenth" there were substituted the word "one-fifth."—[Mr. Lunn.]

Brought up, and read the First time.

Mr. LUNN: I beg to move, "That the Clause be read a Second time."
Parliament has wisely decided to differentiate between earned income and unearned income. I have not read the Debates that took place when this scheme was carried out, but I often wonder what justification was offered for any able-bodied man or woman, who neither toiled nor spun, receiving unearned income at all. I could not offer any justification for people who are able to work receiving an income for which they do not work. At the same time Parliament has made some differentiation in the matter. For instance, a married man in receipt of an income of £325 would be liable to taxation on £100, having been excused £225 for himself and his wife. If his income was earned he would be liable to taxation on only £90. This new Clause would give further relaxation to the people who work for their livelihood. I need not say that people in receipt of small incomes have some difficulty in getting along at the present moment. I urge upon the learned Solicitor-General that he should give consideration to this new Clause in the interests of people who are earning their livelihood, seeing that consideration has already been given to those who do not work for their livelihood.

Sir L. SCOTT: I regret that it is quite impossible for the Government to accede to the request implied in this Amendment. It would cost £10,500,000 sterling in a full year, and, having regard to the position of the Exchequer, that is a conclusive objection to it. The Committee will remember, no doubt, that the scale of differentiation was most carefully considered by the Royal Commission, who recommended that there should be a uniform allowance of one-tenth, and that was carried out in the Finance Act, 1920. The Royal Commission found that the previous system of differentiation worked most unevenly in different cases, and it was in consequence of their recommendations that the present system of taking, so to speak, a lump off the first part of the income was adopted in place of the old system. It is impossible for the Government to consider at all any partial revision of the carefully considered scheme recommended by the Royal Commission and adopted by this House in 1920. It may be that in years to come, when the
expenditure of the country has been successfully reduced to a very much lower scale and revenue is coming in well, it will be thought desirable to have a general reconsideration; but a partial reconsideration of the general system of differentiation adopted is impracticable.

Mr. ADAMSON: I am disappointed with the reply of the Government. If we are asking for a partial review of the recommendations of the Royal Commission, we are asking it on behalf of a section of the community which really requires it. We have spent something like four or five hours considering the interests of a section of the community which is not nearly so hard pressed as that for which we appeal. The learned Solicitor-General has told us that there is a differentiation. That we frankly admit. But we point out just as strongly that that differentiation between earned Income and the income of those who draw their money from investments is not fair. More encouragement should be given to those Members of the community who have to live by what they can earn by their efforts, those who are really giving value to the State for the money they earn as against those who render no service to the State. The Amendment would do only bare justice.
We understood that the cost to the Treasury would not be anything like the figure that has been mentioned. Whether it reaches that cost or the one that we would like to believe it reaches, that does not touch the point of justice. I hope that even yet the Solicitor-General, on behalf of the Chancellor of the Exchequer, may offer us some of the words

of hope that he has given to other sections of the House during the evening—offered in such a generous way that only a. few moments ago we had one hon. Member getting up and giving the Chancellor of the Exchequer and the Solicitor-General special thanks. Here is a section of the community which is more deserving of your generosity than the section with which we have been dealing for the last four or five hours. We are not pleading for your generosity. What we are pleading for is a measure of justice, and it is curious that any time we get up to move an Amendment or propose a new Clause, pleading for a measure of justice for any section of the community, we are suet by the argument either that the Treasury cannot afford it or that the Royal Commission on Income Tax has recommended something else. We are growing a little tired of the excuses put forward by the Chancellor and the Solicitor-General. We believe these excuses would not be so frequent if we had behind us the Federation of British Industries. Unfortunately, we have not an influence of that kind behind us. We represent those who toil and spin. The Federation of British Industries represent those who neither toil nor spin. Consequently, they get these messages of hope and these promises of future reconsideration which we do not get. I hope before the Debate closes we shall have the Solicitor-General giving us one of those messages of hope and promising that he will reconsider this before the Report stage is reached.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 61: Noes, 254.

Division No. 178.]
AYES.
[9.19 p.m.


Adamson, Rt. Hon. William
Grundy, T. W.
Polson, Sir Thomas A.


Addison, Rt. Hon. Dr. Christopher
Guest, J. (York, W.R., Hemsworth)
Raffan, Peter Wilson


Banton, George
Hartshorn, Vernon
Richardson, R. (Houghton-le-Spring)


Barker, G. (Monmouth, Abertillery)
Hayday, Arthur
Rose, Frank H.


Barnes, Major H. (Newcastle, E.)
Hayward, Evan
Sexton, James


Benn, Captain Wedgwood (Leith)
Hirst, G. H.
Short, Alfred (Wednesbury)


Bowerman, Rt. Hon. Charles W.
Hogge, James Myles
Sitch, Charles H.


Bramsdon, Sir Thomas
Holmes, J. Stanley
Swan, J. E.


Briant, Frank
Irving, Dan
Thomas, Brig.-Gen. Sir O. (Anglesey)


Bromfield, William
John, William (Rhondda, West)
Thomson, T. (Middlesbrough, West)


Cairns, John
Jones, Morgan (Caerphilly)
Walsh, Stephen (Lancaster, Ince)


Carter, W. (Nottingham, Mansfield)
Kenyon, Barnet
Watts-Morgan, Lieut.-Col. D.


Cecil, Rt. Hon. Lord R. (Hitchin)
Lawson, John James
White, Charles F. (Derby, Western)


Collins, Sir Godfrey (Greenock)
Lyle-Samuel, Alexander
Wignall, James


Davies, A. (Lancaster, Clitheroe)
Maclean, Rt. Hn. Sir D. (Midlothian)
Williams, Aneurin (Durham, Consett)


Davies, Alfred Thomas (Lincoln)
Murray, Dr. D. (Inverness & Ross)
Williams, Col. P. (Middlesbrough, E.)


Edwards, C. (Monmouth, Bedwellty)
Myers, Thomas
Wintringham Margaret


Finney, Samuel
Naylor, Thomas Ellis
Wood, Major M. M. (Aberdeen, C.)


Foot, Isaac
Newbould, Alfred Ernest



Fraser, Major Sir Keith
O'Grady, Captain James
TELLERS FOR THE AYES.—


Galbraith, Samuel
Parkinson, John Allen (Wigan)
Mr. Lunn and Mr. Frederick Hall.


Gillis, William




NOES.


Adkins, Sir William Ryland Dent
Greene, Lt.-Col. Sir W. (Hack'y, N.)
Norman, Major Rt. Hon. Sir Henry


Ainsworth, Captain Charles
Greenwood, Rt. Hon. Sir Hamar
Norris, Colonel Sir Henry G.


Armitage, Robert
Greer, Sir Harry
Norton-Griffiths, Lieut.-Col. Sir John


Armstrong, Henry Bruce
Gregory, Holman
Parry, Lieut.-Colonel Thomas Henry


Ashley, Colonel Wilfrid W.
Greig, Colonel Sir James William
Pearce, Sir William


Astbury, Lieut.-Com. Frederick W.
Gritten, W. G. Howard
Pease, Rt. Hon. Herbert Pike


Astor, Viscountess
Guest, Capt. Rt. Hon. Frederick E.
Perkins, Walter Frank


Atkey, A. R.
Hall, Lieut.-Col. Sir F. (Dulwich)
Perring, William George


Baird, Sir John Lawrence
Hamilton, Sir George C.
Philipps, Sir Owen C. (Chester, City)


Baldwin, Rt. Hon. Stanley
Hannon, Patrick Joseph Henry
Pickering, Colonel Emil W.


Banbury, Rt. Hon. Sir Frederick G.
Harmsworth, C. B. (Bedford, Luton)
Pilditch, Sir Philip


Barker, Major Robert H.
Harmsworth, Hon. E. C. (Kent)
Pinkham, Lieut.-Colonel Charles


Barlow, Sir Montague
Haslam, Lewis
Pollock, Rt. Hon. Sir Ernest Murray


Barnett, Major Richard W.
Henderson, Lt.-Col. V. L. (Tradeston)
Pownall, Lieut.-Colonel Assheton


Barnston, Major Harry
Hennessy, Major J. R. G.
Pratt, John William


Barrand, A. R.
Herbert Dennis (Hertford, Watford)
Preston, Sir W. R.


Barrie, Sir Charles Coupar (Banff)
Hills, Major John Waller
Purchase, H. G.


Bartley-Denniss, Sir Edmund Robert
Hinds, John
Rae, Sir Henry N.


Bell, Lieut.-Col. W. C. H. (Devizes)
Holbrook, Sir Arthur Richard
Remer, J. R.


Bellairs, Commander Carlyon W.
Hood, Sir Joseph
Remnant, Sir James


Benn, Sir A. S. (Plymouth, Drake)
Hope, Sir H.(Stirling & Cl'ckm'nn,w.)
Renwick, Sir George


Betterton, Henry B.
Hope, Lt.-Col. Sir J. A. (Midlothlan)
Richardson, Sir Alex. (Gravesend)


Bigland, Alfred
Hopkins, John W. W.
Richardson, Lt.-Col. Sir P. (Chertsey)


Bird, Sir R. B. (Wolverhampton, W.)
Hopkinson, A. (Lancaster, Moseley)
Roberts, Rt. Hon. G. H. (Norwich)


Blair, Sir Reginald
Horne, Edgar (Surrey, Guildford)
Roberts, Samuel (Hereford, Hereford)


Blake, Sir Francis Douglas
Horne, Sir R. S. (Glasgow, Hillhead)
Roberts, Sir S. (Sheffield, Ecclesall)


Blane, T. A.
Hume-Williams, Sir W. Ellis
Robinson, S. (Brecon and Radnor)


Boscawen, Rt. Hon. Sir A. Griffith-
Hunter-Weston, Lt.-Gen. Sir Aylmer
Robinson, Sir T. (Lancs, Stretford)


Bowyer, Captain G. W. E.
Hurd, Percy A.
Samuel, A. M. (Surrey, Farnham)


Brassey, H. L. C.
Hurst, Lieut.-Colonel Gerald B.
Samuel, Samuel (W'dsworth, Putney)


Breese, Major Charles E.
Inskip, Thomas Walker H.
Sanders, Colonel Sir Robert Arthur


Bridgeman, Rt. Hon. William Clive
Jackson, Lieut.-Colonel Hon, F. S.
Sassoon, Sir Philip Albert Gustave D.


Briggs, Harold
Jameson, John Gordon
Scott, A. M. (Glasgow, Bridgeton)


Broad, Thomas Tucker
Jephcott, A. R.
Scott, Sir Leslie (Liverp'l, Exchange)


Brotherton, Colonel Sir Edward A.
Jodrell, Neville Paul
Seddon, J. A.


Brown, Brig.-Gen. Clifton (Newbury)
Johnson, Sir Stanley
Shaw, Hon. Alex. (Klimarnock)


Bruton, Sir James
Johnstone, Joseph
Shaw, William T. (Forfar)


Buckley, Lieut.-Colonel A.
Jones, Sir Edgar R. (Merthyr Tydvll)
Shortt, Rt. Hon. E. (N'castle-on-T.)


Butcher, Sir John George
Jones, G. W. H. (Stoke Newington)
Simm, M. T.


Campion, Lieut.-Colonel W. R.
Jones, Henry Haydn (Merioneth)
Sprot, Colonel Sir Alexander


Carter, R. A. D. (Man., Withington)
Jones, J. T. (Carmarthen, Llanelly)
Stanley, Major Hon. G. (Preston)


Casey, T. W.
Joynson-Hicks, Sir William
Stanton, Charles Butt


Cautley, Henry Strother
Kellaway, Rt. Hon. Fredk, George
Steel, Major S. Strang


Chamberlain, N. (Birm., Ladywood)
Kelley, Major Fred (Rotherham)
Stephenson, Lieut.-Colonel H. K.


Child, Brigadier-General Sir Hill
Kidd, James
Stevens, Marshall


Churchman, Sir Arthur
King, Captain Henry Douglas
Stewart, Gershom


Clough, Sir Robert
Lambert, Rt. Hon. George
Strauss, Edward Anthony


Cockerill, Brigadier-General G. K.
Larmor, Sir Joseph
Sturrock, J. Leng


Colfox, Major Wm. Phillips
Law, Alfred J. (Rochdale)
Sugden, W. H.


Colvin, Brig.-General Richard Beale
Lewis, Rt. Hon. J. H. (Univ., Wales)
Sutherland, Sir William


Cope, Major William
Lewis, T. A. (Glam., Pontypridd)
Sykes, Sir Charles (Huddersfield)


Cory, Sir C. J. (Cornwall, St. Ives)
Lloyd, George Butler
Taylor, J.


Cowan, D. M. (Scottish Universities)
Locker-Lampoon, G. (Wood Green)
Thomas, Sir Robert J. (Wrexham)


Dalzfel, Sir D. (Lambeth, Brixton)
Locker-Lampson, Com. O. (H'tingd'n)
Thomson, F. C. (Aberdeen, South)


Davidson, Major-General Sir J. H.
Lorden, John William
Thomson, Sir W. Mitchell- (Maryhill)


Davies, David (Montgomery)
Lort-Williams, J.
Townley, Maximillan G.


Davies, Sir David Sanders (Denbigh)
McCurdy, Rt. Hon. Charles A.
Tryon, Major George Clement


Davies, Thomas (Cirencester)
Mackinder, Sir H. J. (Camlachie)
Vickers, Douglas


Davies, Sir William H. (Bristol, S.)
McLaren, Robert (Lanark, Northern)
Wallace, J.


Davison, Sir W. H. (Kensington, S.)
M'Lean, Lieut.-Col. Charles W. W.
Walters, Rt. Hon. Sir John Tudor


Dawson, Sir Philip
Macleod, J. MackIntosh
Walton, J. (York, W. R., Don Valley)


Dewhurst, Lieut.-Commander Harry
McMicking, Major Gilbert
Ward, Col. J. (Stoke-upon-Trent)


Dockrell, Sir Maurice
McNeill, Ronald (Kent, Canterbury)
Ward, Col. L. (Kingston-upon-Hull)


Doyle, N. Grattan
Macpherson, Rt. Hon. James I.
Ward, William Dudley (Southampton)


Du Pre, Colonel William Baring
Macquisten, F. A.
Waring, Major Walter


Edgar, Clifford B.
Mallalieu, Frederick William
Warner, Sir T. Courtenay T.


Edge, Captain Sir William
Malone, Major P. B. (Tottenham, S.)
Watson, Captain John Bertrand


Edwards, Major J. (Aberavon)
Manville, Edward
Weston, Colonel John Wakefield


Erskine, James Malcolm Monteith
Marks, Sir George Croydon
Whaler, Col. Granville C. H.


Evans, Ernest
Martin, A. E.
White, Col. G. D. (Southport)


Falcon, Captain Michael
Middlebrook, Sir William
Willey, Lieut.-Colonel F. V.


Falle, Major Sir Bertram Godfray
Mitchell, Sir William Lane
Williams, C. (Tavistock)


Fell, Sir Arthur
Molson, Major John Elsdale
Willoughby, Lieut.-Col. Hon. Claud


Fisher, Rt. Hon. Herbert A. L.
Mond, Rt. Hon. Sir Alfred Moritz
Winterton, Earl


Flannery, Sir James Fortescue
Morden, Col. W. Grant
Wise, Frederick


Forestier-Walker, L.
Moreing, Captain Algernon H.
Wood, Hon. Edward F. L. (Ripon)


Forrest, Walter
Morrison-Bell, Major A. C.
Wood, Sir H. K. (Woolwich, West)


Fremantle, Lieut.-Colonel Francis E.
Munro, Rt. Hon. Robert
Wood, Major Sir S. Hill- (High Peak)


Ganzoni, Sir John
Murchison, C. K.
Worsfold, T. Cato


Gee, Captain Robert
Murray, John (Leeds, West)
Worthington-Evans, Rt. Hon. Sir L.


George, Rt. Hon. David Lloyd
Neal, Arthur
Yeo, Sir Alfred William


Gibbs, Colonel George Abraham
Newman, Sir R. H. S. D. L. (Exeter)
Younger, Sir George


Gilmour, Lieut.-Colonel Sir John
Newson, Sir Percy Wilson



Goff, Sir R. Park
Newton, Sir D. G. C. (Cambridge)
TELLERS FOR THE NOES.—


Gould, James C.
Nicholson, Brig.-Gen. J. (Westminster)
Colonel Leslie Wilson and Mr.


Green, Joseph F. (Leicester, W.)
Nield, Sir Herbert
Parker.

NEW CLAUSE.—(Amendment of 9 and 10 Geo. V., c. 32, s. 16.)

Section sixteen of the Finance Act, 1919 (which exempts from Income Tax wounds and disability pensions), shall be extended to apply to pensions granted to widows whose husbands wore killed as the result of naval, military, or air force service."—[Mr. Lawson.]

Brought up, and read the First time.

Mr. LAWSON: I beg to move, "That the Clause be read a Second time."
Section 16 of the Finance Act, 1919, exempts from Income Tax the wounds and disability pensions of soldiers. This new Clause proposes to extend the application of that principle to the pensions of widows whose husbands were killed as the result of Naval, Military or Air Force service. On looking at the records I find that it was not necessary to argue the case of the disability pensions during the passage of the Budget of 1919. All that was necessary was to draw the attention of the Chancellor of the Exchequer to the fact that those pensions were being taxed. Consequently, that Budget which was introduced by the right hon. Gentleman who immediately preceded the present Chancellor of the Exchequer, very definitely laid it down that those pensions ought to be excused from Income Tax. I want to make it clear that on that occasion the fact had simply to be stated to the House to appeal to its sense of fairness and justice, and to make it impossible that the Pensions Ministry should pay a pension with one hand and that the Exchequer should take part of it away with the other. It seems to me that it must have been a pure oversight at that time that the widows' pensions were not given the same rights as were the disability pensions of the men. I cannot find any reference to the matter in previous Budget discussions.
The attention of certain forces and organisations in the country has been called to this matter, and they have at once placed on record their opinion. This is a question which has a very strong body of opinion behind it. The British Legion this year passed a very strong resolution in favour of the exemption of the widows' pension. It was to this effect:
The British Legion indignantly protests against the action of the Government in depriving the children of soldiers killed in the War of a considerable portion of the
allowance obtained for them by their fathers by aggregating for Income Tax purposes this allowance for pensions payable to their mothers.
A copy of that was sent to the Prime Minister, the Chancellor of the Exchequer, and every Member of the House. I thought it would have been only necessary to draw the attention of the Chancellor of the Exchequer to this matter in order to have the principle applied to these pensions. I did not think it would be necessary to speak at any length on the matter, and I ask the Committee, in view of the probable refusal that will be given by the Chancellor of the Exchequer, to exhibit the same sense of fairness and justice to the widows receiving pensions as they did, spontaneously, in 1919 in the case of the wounds and disability pensions.
It is not a big matter. The Chancellor of the Exchequer cannot say that it will only cost £400,000, as he did on a previous Amendment. It is a matter of mere justice to people who, at any rate, have suffered to a degree for which money cannot pay. I ask the right hon. Gentleman to make this pension a real pension, and not to reduce it by taxing it, as is the case at present. I trust, if the right hon. Gentleman does actually refuse this proposal, that the Committee will take this matter very definitely in hand and will agree to this new Clause, which will not be a very heavy item financially, but will he a boon to a large number of people in the country.

Sir L. SCOTT: It is an invidious task to stand at this desk and to refuse time after time Amendments of this type, which appeal to one's sense of human sympathy. Yet it is my plain duty to refuse to accept this Clause. I particularly ask the attention of hon. Members opposite to what I have to say. I wish to submit to them the reasons why we are not in a position to accept this. As to the particular sum which this Clause would cost, I have not, at the moment, any estimate that I can give to the Committee. Some Amendments cost more than others, but it is plain that this Clause would not cost nearly as much as many Amendments. The way in which I want to put the matter is this. We all appreciate that the loss by a woman of her husband, particularly a man killed in the War, which is the case contemplated by this Clause, is an irreparable loss. It
cannot be made good by any money payment; we all feel that. So fax as it can be made good, the pension is given for that purpose, not as a compensation for the loss of affection, but as a compensation for the earning power that is gone. That is the only way in which the State can deal with these things. The pension is assessed, after consideration, in accordance with principles laid down in this House, in order that it should be an adequate pension, having regard to the circumstances of the case and to the amount the country can afford to give by way of pension. The pensions bill in this country in respect of the War is, as we know, several hundred millions sterling. If that pension was a right pension to give, well and good; if it was not enough, the pension ought to have been higher, but I feel sure the Committee will agree with me that if the pension is in any case too small, the way to redress that is not through the Income Tax, but by considering the question of the pension on its merits. The Committee, I submit, must approach this question—which is a difficult question upon which we have to exercise a fair judgment rather in spite of our feelings—from the point of view that the pensions that have been given after the War by this House have been as fair as this House was in the circumstances able to make them.
That being so, and assuming that the pension is a fair pension, let us consider the position of the widow in receipt of it. She either has some other source of income or she has not. If she has not, probably her pension will not take her income above the taxable limit, and in all probability she escapes Income Tax altogether. Another widow may have some income from other sources, and her income may, by the addition of the pension, be taken above the taxable limit. Is she to get a remission of tax, which will in effect be an addition to her pension, while the widow with no other source of means gets no such indirect addition? Take another comparison. Widow A, whose husband was in the service of a railway company and was killed, comes into, a pension under some scheme of pensioning. Widow B gets exactly an identical pension as a War pension. Their other sources of income are identical. Let us assume that they are
both just over the limit of the taxable level, that they have the same number of children, the same responsibilities, and, as I said, the same income, Is one widow to be remitted taxation, simply because of the chance that the original reason why she received her pension was that her husband was killed in the War, and the other widow not to be remitted? You cannot do it. You can only base taxation on income, on the footing of the amount of the individual income. The moment you start considering other matters than the amount of the income, the State at once finds itself in a position of difficulty by reason of the resultant inequalities in individual cases. The hon. Member for Chester-le-Street (Mr. Lawson), who moved the Clause, said the matter had never yet been considered by this House on any Finance Rill. As a matter of fact, though I am not surprised that he did not happen to have found it, it has been considered. It was considered in Committee on the Finance Bill last year, on a Clause moved by the hon. Member for West Middlesbrough (Mr. Trevelyan Thomson) similar to the Clause now moved. The Chancellor of the Exchequer then expressed regret that he was unable to accept the Amendment, and gave his reasons, which were much more shortly stated than the reasons which I have given, and the Clause was negatived without a Division. The reference is to the OFFICIAL REPORT Of the 21st June, 1921, column 1328, vol. 143. For the reasons that I have given, though I recognise that we are so near the War that our hearts are constrained in sympathy with the Amendment, I am afraid I cannot accept it.

Viscountess ASTOR: Could the Solicitor-General explain to me, as you are exempting men who are wounded, why you should not exempt women as well? I do not want to make a speech on the subject, but I feel rather keenly that if women and the widows were organised, and could bring the pressure on the House that some other trades do, the Government might give them more consideration. I do not believe for one minute that widows' pensions are ever going to be reconsidered. No one is going to bring them up, and I feel that, if we want to do anything for them, we have get to do it now, because we shall never have another chance. I know the
Solicitor-General is in full sympathy. [An HON. MEMBER: "Oh, oh"!] Yes, I do know that. I am not here to do in the Government, but simply to point out that I cannot help thinking that if widows were organised and could bring pressure on the House, all the hon. Members would consider well before voting against the Clause.

Sir F. BANBURY: No.

Viscountess ASTOR: No, not the right hon. Member for the City of London (Sir F. Banbury). I will exempt you. The right hon. Member for the City of London is so contrary that he is like the man of whom it was said that if he ever drowned he would float up-stream. I would like just to say that the women do feel this, and I feel it myself, and I would like to know why they cannot be put on the same footing as men, because many of these women are working women.

Sir L. SCOTT: As a preliminary remark, may I deprecate earnestly the allegation made by the hon. Member for Plymouth (Viscountess Astor) that any other trade is so organised as to exert more pressure on this House than those to whom she refers, but subject to that special protest, I want to point out the difference between the pension of a man for wounds and the pension of a widow. The pension of a man for wounds is essentially compensation for injuries received in the service of the State. It has a certain analogy to a case under the Workmen s Compensation Act. A pension to a widow is, if I may use an illustration that will appeal to those hon. Members who are lawyers in the House, like a payment under what is known as Lord Campbell's Act, which gives a money compensation for the money loss that the person suffers by reason of the death of somebody who has been supporting him or her. It is a money compensation essentially, whereas the other is different. The difference between the two was one of the reasons why the House took the view which it took last year and the view that has been put forward on previous occasions. But even so, if the Committee think the two are alike, I answer that the mistake—the logical mistake—is not in omitting to give an allowance for taxation to the widow, but in giving it to the man, and if a logical mistake has been made, out of too strong an influence of human
sympathy for human disability, that is, I venture to submit, no ground for extending it to a case such as this.

Sir J. BUTCHER: In his first speech the learned Solicitor-General gave some of the reasons against accepting this Amendment, which appeared to me to show, if anything, that it was just as reasonable to subject a man's disability pension to Income Tax as it was to subject a widow's pension to Income Tax. Every argument he used to show that the widow's pension should be subject to Income Tax might with equal force, or equal weakness, have been applied to show that the man's disability pension should be subject to Income Tax. But when he got up, in response to the appeal of the hon. Member for Plymouth (Viscountess Astor), to explain the difference between the man's disability pension and the pension of the woman who had lost her husband, it appeared to me that he contradicted his previous speech. His reason for exempting the man's pension from Income Tax was that it was compensation for money lost, and his explanation, just before, of the woman's pension for the loss of her husband was that she was getting money compensation for money lost. If it be compension for money lost in one case which entitles a man to exemption from Income Tax, why should not a woman who receives compensation for money lost also be exempt? Therefore the learned Solicitor-General, if he proved anything—and I do not think he did—proved that you ought to subject a man's disability pension to Income Tax. But that is a concluded case. It has been conceded, with practically the unanimous consent of this House, that a man's disability pension shall not be subject to Income Tax, and I say, if that be true, we cannot go back on that now. It is no good talking about a logical error or something of that sort. We are not going to accept that view of the man's disability pension in regard to Income Tax. I believe the majority of the Committee will regard it as a matter that is settled by the decision of this House, and we are not going back upon it here or, as I believe, in any future Parliament.
What is the real reason, as I think, for exempting a man's disability pension from Income Tax? It is this. It is a source of income of an entirely exceptional kind
—a source of income to the man for having fought for his country, and suffered for his country—and the House is practically unanimous in thinking that when the State gave a man a pension—very often no real compensation for the injury he had suffered, but something, at any rate—this House thought it unreasonable to take away with one hand what it gave with the other, and the reason was that this was an exceptional source of income. I say that the same principle precisely applies to the widow's pension. It is an exceptional source. It is something which the State gives to the woman, not for any particular service she has rendered, as in the case of an old pensioner under the Civil Service, but the State comes to the woman, and says, "Your husband has been a gallant servant of the State. He has fought for the State, and he has given up his life for the State. You have lost, not only your husband, but you may have lost even your means of subsistence and livelihood." Therefore, I say, that is an entirely exceptional payment, and it would be as unreasonable in the case of the woman's pension for the State to take away with one hand what it has given with the other, as it would be in the ease of a man's disability pension. I do not believe this is going to cost a great deal. I am not sure that the question of cost enters into this question. It is a question of moral justice. But if it did cost a great deal, I am quite certain the Solicitor-General would have told us. If he had said it was going to cost £20,000,000, should we not have been told? Would not we in this House have been frightened, or the attempt have been made to frighten us into refusing this Amendment on account of the excessive cost? Would not the vigilant watchdog of the Treasury have instructed the learned Solicitor-General that it would cost a great deal?

Sir L. SCOTT: I told the Committee that. I did not know the figure, but I thought it was a small one.

Sir J. BUTCHER: I am very much obliged to my hon. and learned Friend. I did not catch the phrase "it was a small one." If there were anything necessary to reinforce my argument, surely that statement of the learned Solicitor-General ought to clinch the matter. If it were
some enormous sum which the country could not afford this year, I could understand the Government might say, "This is a claim of justice and reason, but we cannot concede it this year." But now my hon. and learned Friend tells us that the cost would be very small. Under those circumstances I do beg of him, and I do beg of the Government, to reconsider this decision, and they will thereby do not only an act of bare justice in itself, but they will remove from the minds of many people in this country the feeling that the Government are not behaving quite fairly in a matter which deeply affects their interest, and, what is even more important, their moral feelings.

Mr. TREVELYAN THOMSON: The learned Solicitor-General referred to the Debate which took place in Committee last year, when I had the honour to move a similar Clause, and he referred to the reply of the Chancellor of the Exchequer to the effect that financial considerations prevented that concession being made. That, surely, cannot apply to-day, seeing that in the earlier part of our proceedings many hundred thousands of pounds, I understand, were given away to those who are pleading the cause of the Super-tax payer. I submit that if it be possible to make those concessions to those who are well able to bear the burden which was cast upon them, it is unfair to plead to this Committee financial need in resisting the claim of the widows. The learned Solicitor-General said that it would lead to anomalies if we made this concession. I submit that the hon. and learned Member for York (Sir J. Butcher) has shown that there are existing anomalies to-day, and the mere fact that a concession of this kind might lead to anomalies, surely is no reason why one anomaly should not be swept away. I hope the Government will reconsider the appeals which have been made to them, and as an act of justice, having made these big concessions to large and wealthy financial interests, will not resist this unanimous claim.

Mr. ALFRED DAVIES (Clitheroe): The ground has been fairly well covered so far as this House is concerned in respect to this matter. The hon. and learned Member for York (Sir J. Butcher), I think, thoroughly well dealt with the statement of the Solicitor-General. There is just one point in the speech of the Solicitor-General to which
I should like to refer—the analogy between the Workmen's Compensation Act and the compensation given by the State for injuries suffered owing to the War. But the analogy is no analogy. If an employer of labour was called upon to pay compensation for injuries to a worker, it would be impossible for that employer to levy any sort of a tax and, recover the compensation that he had paid. In this case the State has an obligation. The State has employed these men, who were rewarded quite inadequately, as I believe, and also the widows were inadequately rewarded, even from the money standpoint. What the Government are trying to do is to justify the continuation of this Income Tax on the ground that it will apply in a similar way to the case of a man injured at a works. I hope, therefore, notwithstanding the decision which has previously been arrived at on this subject, that hon. Members will see their way to support this very small concession that is asked for.

10.0 P.M.

Mr. G. LOCKER-LAMPSON: The Solicitor-General in the course of his speech made an extraordinary statement when he said that this Amendment had really nothing to do with Income Tax. If that was so he would have to bring in a Pensions Bill year by year as he raised or lowered the Income Tax. [HON. MEMBERS: "No, no!"] Certainly. Supposing you have an Income Tax of 10s., you would have to bring in a Pensions Bill to increase the pensions according to that amount. However, I really do not think there is much in that argument after all. The point I want specially to make is this. Here are Clauses one after another. The acceptance of them by the Government, and by the House, very largely depends upon the loss of revenue they bring to the Exchequer. If that be so, in every one of these Clauses we ought to have an estimate.

Sir L. SCOTT: I could not give figures before, but I have some now. If this Amendment be passed, the cost, so far as can be judged, will be about £100,000 per year. The Amendment which goes with it, the children's allowance paid to widows—it is very difficult to differentiate it from this one—will cost another £50,000.

Mr. LOCKER-LAMPSON: The right hon. Gentleman said previously the sum
would be a small one, but it appears it is a question now of £150,000 per year. The Chancellor of the Exchequer uses the word "expenditure" in connection with these Amendments, but this has nothing whatever to do with expenditure. It means simply that you are taking a tax from certain poor people and spending it on unnecessary officials in Whitehall. Therefore, in the case of these Amendments, you have really to make up your minds whether certain expenditure is absolutely necessary so that you cannot afford not to take taxation from very poor people.

Sir F. BANBURY: The question seems to me not whether this is going to cost £100,000 or £50,000 or £1,000,000 or £2,000,000. The question is: Is it right or wrong? That is the only question. If you are going to begin to exempt widows because you have exempted men who have been wounded you will have to go on and exempt children.

Viscountess ASTOR: Hear, hear!

Sir F. BANBURY: And when you have exempted these, there will be some other exemption.

Viscountess ASTOR: No, no!

Sir F. BANBURY: Oh, yes. Other exemptions will be brought forward, and it will be said, having exempted these people you should also make other exemptions. There is no end to it. Widowers have told me that if they were not widowers they could claim exemption. Because they are widowers they do not get exemption, but their sons got it and that they thought was unfair. Everybody should pay Income Tax according to their means. There ought not to be any exemptions at all in my opinion. There might have been some argument before people had the vote, but they have the vote now, and I would point out to the hon. Member for Plymouth, and the widows she is so anxious to champion that widows have the vote. [HON. MEMBERS: "No!"] Oh, yes. [HON. MEMBERS: "Not necessarily."] Well, she may have the vote. If she is over 30—and very few of them are! If she has the vote she must bear the responsibility which that vote carries, for with the vote she has the power of imposing taxation, through her Member, upon certain people. She must bear in mind that she, too, may
have to pay. Otherwise you at once abandon the correct principle and people would impose taxation upon a smaller class for their own benefit. That is absolutely wrong. But we are tending in that direction. The first speech of the Solicitor-General, if I may say so, was an excellent speech in which he pointed out the true bearings of the case. I sincerely trust that the Government will adhere to their decision which they will, I am sure, carry by a large majority.

Lord R. CECIL: May I just point out to the right hon. Baronet the Member for the City (Sir F. Banbury) what his argument really amounts to. He says he is against any exemptions at all. That is an arguable case, but surely it is very hard to insist on that in the case of the widow when you have granted exemptions to a large number of other people. That is not the principle of our legislation. The only question we have to consider is whether a case for exemption has been made out. I think there is a good deal to be said for the principle laid down by the right hon. Gentleman the Member for the City, but it is not the law, and we cannot rely upon it as an answer to this Amendment. The right hon. Gentleman says that widows have got votes.

Sir F. BANBURY: Some of them.

Lord R. CECIL: At any rate, the younger widows have not got votes. The question is not giving a special exemption to women, but to give the same exemption to them which has been granted to men, and the question of women having votes does not affect the matter at all. I wish to ask the special attention of the Chancellor of the Exchequer to this Amendment, because I think it is one which the Government ought not to resist. Here is a case in which you have laid it down that men with pensions for injuries received in the War are not to be subject to Income Tax, but you have not extended that principle to women who have been injured in the War by the loss of their husbands. What is the distinction you are going to draw between those two cases consonant with justice?
The Solicitor-General says that this proposal would create an inequality, but this is a much greater inequality than any which he pointed out. Here is a case
where you are distinguishing women as against men who have both suffered injury in the War. The question whether they were actually employed by the State, I am sure the Solicitor-General will see, makes no difference, because they have both been treated right through in our legislation as people who have suffered injury by the loss of their nearest and dearest in the State's service, and you can make no distinction between the women who have become widows and the men who have been wounded. What are we to say about these inequalities? Are there really so great inequalities as the Solicitor-General makes out? He says that women in receipt of an income over the Income Tax level will be entitled to this deduction, but those coming under the Income Tax level will not be entitled to it. I do not think that that is a sound argument.
May I suggest that there is really a sound reason why pensions of this kind should be given for the greatest service to the State than we can conceive, and it is that the pension is given, not as compensation, because that is impossible, but as a substitute for the pecuniary loss which has been incurred. If that has been estimated at so many pounds a year, is it reasonable that it should vary according to the varying taxation of each succeeding year? Is there not a good reason for saying in that ease that the amount fixed should always be paid, whatever the taxation may be? The only two ways you can do that is by continually varying the pension, which would be absurd, or by saying that pensions shall not be subject to Income Tax, and therefore not subject to any varying deduction under the Finance Bill. It seems to me that that is a good principle. The Solicitor-General was very anxious to find some good principle on which to oppose these exemptions, but if he exempts men and does not exempt women, he will not be acting on any principle, whereas, if he exempts all those who receive War pensions, he will be on more solid ground.

Mr. S. ROBERTS: I think the right hon. Gentleman might make a concession in those cases where the widows are not paying 5s. in the £. Where a widow has no children and has a total income not exceeding £350, then she would not pay any Income Tax on her pension, although
she would pay on the other part of her income. A widow at the present time receiving the normal pension does not pay anything, but most of us know cases of widows receiving pensions who are liable, and are even paying the Super-tax. This Amendment does not deal with the very poor widow, but only with the widow who comes just above the line of those that are very poor. If the suggestion could be considered, that what is called the 2s. 6d. Income Tax should be remitted, it would mean that the widow with £350 would receive her pension without deduction, and if she had children they would increase that liability and it would bring it up to £400. I think that would meet the two cases, that is, the case of the widow herself and the children whose pensions are now treated by the Inland Revenue as part of her income. I do not think that this would cost half the total amount which has been mentioned, because the larger proportion of the £150,000 would probably go to the richer section of the widows, because the poor widows come below the Income Tax level.

Sir W. LANE MITCHELL: I would like to draw attention to the fact that where a man has been wounded you give him a pension and there is no Income Tax payable on it, but if he has been killed, then the Income Tax is charged on the widow's pension. I do not think that is either fair or equitable.

Colonel P. WILLIAMS: I would suggest to the Government a way to deal with this Amendment. I am inclined to agree with the Solicitor-General that this alteration, or this act of justice to the woman, should be done by means of the Pensions Ministry rather than in the way suggested by the Amendment. The strong point which has been made is that the women under the Income Tax limit would obtain no relief, whereas the women above the Income Tax limit would benefit. We ought to have an undertaking that the Pensions Minister will take charge of this matter and increase the allowance of the widow in order that she might be compensated for that amount of the tax which she has to pay to the State. That would throw upon the Pensons Ministry this additional burden of £150,000.
On this matter I would like to point out that the Pensions Vote is a decreas-
ing amount, and I am perfectly certain that the people of this country would not be averse to allowing that Vote to decrease just a little slower in order that this act of justice might be done to the widows who have lost their husbands during the War. I make that appeal to the Government, and if the Chancellor of the Exchequer could give us that undertaking I would appeal to the Mover of this Amendment to withdraw it, and to rely upon the promise of the Government to deal with this matter through the Pensions Ministry rather than by an exemption under the Income Tax.

Mrs. WINTRINGHAM: I would like to remind the right hon. Baronet the Member for the City of London (Sir F. Banbury) that these are exceptional cases. In my opinion these pensions should be regarded rather in the light of dividends which are often paid free of Income Tax. Widows ought to have every consideration in view of the circumstances in which they are placed. They have often to work in order to supplement their means of living and to educate their children, and they certainly ought to be helped as much as possible in carrying out the duties which they have to perform in acting both as father and mother to the children.

Captain BOWYER: The only speech made against this Amendment has been that of the right hon. Baronet the Member for the City of London who used, perhaps, the most extraordinary argument ever put forward by such a financial expert. The right hon. Gentleman started by saying we ought in these matters to do what is right and not what is wrong. Then he went on to suggest that if the Government were to give way here, irrespective presumably of what is right or wrong, there would be other claims for exemption and still more claims would follow. Then the right hon. Gentleman finished up by throwing his original argument overboard and suggesting that the criterion should be the number of exemptions that would be claimed, and he asserted it would therefore be very dangerous for the Government to accept such an Amendment as this.

Sir F. BANBURY: I said that all these exemptions were wrong, and this was not less wrong because it did not happen to cost very much.

Captain BOWYER: My hon. Friend the Member for Hereford (Mr. S. Roberts) made a concrete suggestion to the Government. But those of us who wish to see the Amendment accepted are, I think, on stronger ground, because we wish to put the women in the same position as the men, and if we are going to put them in a different position to the extent suggested by the hon. Gentleman it will be a confession that the claim now put forward on their behalf is not so good a claim as that advanced on behalf of the men and granted in previous legislation. I submit that the further we get away from the 11th November, 1918, the dimmer becomes the memory of the country, and especially of the Government, as regards these ex-service men and women. When we consider their straitened circumstances, and what the men and the women whom the Amendment principally affects have suffered, I contend that the Government might meet us and do for the women what they have already by legislation done for the men.

Sir R. HORNE: The last speaker suggested that the country has become less keen in regard to the claims of people who suffered from the War, and that, the further away we get, the more negligent we become of those who served us; but I would remind the Committee that this matter is not now being discussed for the first time. It. has been discussed on every Finance Bill which has been passed since the War, and upon every occasion the House has decided in the same way.

Mr. HARTSHORN: And every time has been wrong.

Sir R. HORNE: That may be so, but at least it is a complete answer to what my hon. and gallant Friend has said. At a time when feelings were most stirred, and when the desire to compensate those who had suffered was most keen, the House came to that decision, which has been in the Finance Bill every year since the War, and is repeated in the present year's Finance Bill. I wish to address myself for a moment to a particular consideration. This is not a question which can be dealt with on the basis of balking about the equality of the sexes. My Noble Friend has put it, as one would expect him to put it, on that footing, but in truth the conditions are not at all analogous; and the women whose men
went to the War and suffered are the last people who would seek to be put on that footing. The men were put in a special position, because, being disabled and maimed, and having faced all the horrors that War meant, a special dispensation was made with regard to them. But the widow who remained at home, while she endured anxieties, I admit, did not endure any more anxieties than the women whose husbands were fighting alongside and did suffer the same penalty.
The provision was made for the men. With regard to the widows, these are not easy matters to talk of, because sentiment naturally arises. We want to look at it from a practical point of view in a practical House, and I venture to put it to the Committee, though my words may seem harsh, that, as the Committee has decided before on the same lines which I am now suggesting, the widows of the men who suffered in the War are, so far as practical conditions are concerned, not in any different position from the woman whose husband, working in a munition factory, was killed in the War. What is her position?

Lieut.-Colonel WATTS-MORGAN: Or on the railway.

Sir R. HORNE: Or in any of the great industries of the country. I agree that the man who was kept at home did not endure the horrors that were endured by the man who fought in the trenches, and, therefore, the consideration is not being given to him, if he is maimed, which was given to the man who fought; but so far as the widows of these men are concerned, the position to-day is, I will not say exactly identical, but not very dissimilar, and it is a. very difficult thing to say that, because a woman enjoys a pension which came to her through the fact that her husband was killed in the War, she should have some special advantages over other widows who may have suffered equally in their feelings, and had equal disaster, so far as the people who were near and dear to them were concerned. I confess I find it very difficult to defend the differentiation, which it is suggested by this Amendment that we should make, that one widow should be relieved of Income Tax, as compared with another who should not, though she may have the same troubles in life, the bringing up of children, to which reference has been made, narrowness of
means, and difficulty of circumstances. Upon what grounds are you going to make the differentiation? I turn to one difficulty which will be created by this matter. It does not seem to affect the Noble Lord, but it affects my mind very much. This discrimination, in so far even as concerns the widows of men who were engaged in the War, only affects those who have incomes above the Income Tax limit. You are really giving them a special bonus because they are better off. The pension is to them to that extent increased in value because they happen to have more than is required under the Income Tax limit. I think when you come to consider this matter, not upon grounds of sentiment, though of course the sentiments are good, but when you come to consider it from the practical point of view, the consideration's which have moved Members of the House in the past are equally sufficient and efficacious to move us now.

Sir D. MACLEAN: Like the great majority of hon. Members present, I have listened to Debates where there was what you may call a general consensus of opinion, but I do not think I have listened to a Debate which more fulfilled that description than that which has taken place here to-night. It did not seem to make any difference what part of the House you touched, except the right hon. Baronet the Member for the City (Sir F. Banbury), whom I do not accuse of any lack of sympathy, but who maintained an attitude of consistency which is peculiar to himself. There is very remarkable agreement in all sections of the House that this concession may well be made. The Chancellor of the Exchequer has just said that to make this is to make a special differentiation. But this is not the only case where there is differentiation. That we are constantly making differentiations where a case is made and it is proved that it is not beyond the financial capacity of the year is aptly demonstrated here in the proceedings of the Committee to-day, when I state without any Further comment that the Chancellor of the Exchequer gave way to quite legitimate pressure a sum which certainly was not under £300,000.

Sir R. HORNE: It does not affect the finances of the present year.

Sir D. MACLEAN: I do not want to argue that closely, but I do not agree
with the position the right hon. Gentleman puts. But here is a matter of justice agreed to by practically all sections of the House, and it is going to cost £100,000. It seems to me that in a case like that the Chancellor of the Exchequer should accede to the considered judgment of the House. I hope this matter will go to a Division. I am surprised that the right hon. Gentleman has not seen his way to meet the very practical suggestion which was made by the hon. Member for Hereford (Mr. S. Roberts). We are not working upon logical principles at all. I quite agree that in logic there is no defence for that compromise, which was suggested because if it just in the case of the £350 it is just in the case of £2,000 a year. We do not work on those principles at all and the real aim of this Amendment is to help the widow of the soldier who has given his life in the War, the widow who is in what you may call straightened circumstances. It was suggested that where you have a widow with children to bring up on £250 or £300 a year, that those are hard conditions. That that is a hard case which the Committee as a whole desires to meet. I hope the Chancellor of the Exchequer will meet it.

Mr. NAYLOR: If the Chancellor of the Exchequer cannot give way and meet us, I hope that he will take off the Government Whips and leave the Committee to have a free vote. I should be the last to suggest that hon. Members on the other side are any more lacking in sympathy than those who support this Amendment, but they have taken up an attitude that is neither logical nor consistent. For once in my life I agree with the right hon. Baronet the Member for the City of London (Sir F. Banbury) when he says that this question ought not to he settled on the matter of cost, but as to whether it is right or wrong. If it were to be settled on the question of cost, I should have to remind the Chancellor of the Exchequer of the sacrifice that he made of £32,000,000 by a general reduction of Income Tax. As we are not considering the cost, let us consider the principle of the thing. The Chancellor of the Exchequer appeals to us to treat this matter as practical men and from the point of view of common sense. If we agree that the disabled ex-service man who is receiving a pension shall be exempt from Income Tax, we cannot on
logical grounds refuse to exempt the widow who has lost her husband in the War, and who is called upon to pay Income Tax out of the pension she receives. I do not want to be unkind, but it seems to me that to penalise the widow who has lost her husband in the War is simply taking blood money from her by refusing to exempt her from the operations of income Tax so far as her pension is concerned. I hope the Government will allow that general consensus of opinion that undoubtedly exists in the Committee in favour of this Amendment to be expressed in the Lobby, by giving their supporters a free vote.

Sir RYLAND ADKINS: I hope my right hon. Friend will consider the suggestion made by the hon. Member for Hereford (Mr. S. Roberts) in regard to a line being drawn so as to secure this concession for those widows whose position is such that the difference of income Tax of half the 5s. basis is a matter of real importance. Taking the majority of cases, these are of greater importance than those who are better off. We do not act logically in these matters. If the right hon. Gentleman would consider that, it would relieve the particular place where the shoe pinches most, and it would indicate that there was a way out which, while having due regard for the financial interests of the country, would meet the acute necessities of that type of widow.

Mr. A. HOPKINSON: If the Chancellor of the Exchequer is going to accept any suggestion, I hope he will accept, not the suggestion of the hon. Member for Hereford, but that of the hon. and gallant Member for East Middlesbrough (Colonel P. Williams). That suggestion was a really good one, for this reason, that it threw the burden upon the particular branch of the administration of this country which ought really to bear it, the Ministry of Pensions. To expect the Exchequer to part with revenue of this sort would be unfair. Therefore, it would be better to accept the recommendation of the hon. Member for Middlesbrough. Hon. Members opposite have talked about justice. I am not going to deliver a Socratic monologue about justice. But when they talk about justice, do they think it justice when a widow's pension has been fixed at
a certain figure that it should continue at that figure, though the value of money owing to the decreased price of commodities has gone up considerably? Suppose that a widow's pension was fixed two or three years ago at £150 a year, it is certain that if justice is to be considered—I do not say that it is—the pension ought to be reduced because of the increased value of money now owing to the fall in prices. Therefore, when hon. Members talk about justice, they should at any rate find out what justice is.

General Sir IVOR PHILIPPS: The right hon. Member for Peebles (Sir D. Maclean) said that he hoped we should go to a Division. I hope that the Chancellor of the Exchequer will not compel us to go to a Division. I hope that he will agree to some modification of the Bill as it stands so as to meet those of his party who feel strongly on this matter. The Chancellor of the Exchequer said that the women gladly supported the men in the demand that the men should get their pensions free of tax. I believe that in this respect I can speak for the whole British Army, the whole seven million, and say that they are equally anxious that the women should be free from this tax. Therefore I hope that the Chancellor of the Exchequer will not force us to a Division but will undertake to bring in on Report stage some modification of the present Bill so as to meet those of us who feel very keenly on the matter.

Mr. HOHLER: I suppose that I have in my constituency as many widows who have lost their husbands in the war as any Member of this Committee. I do not believe that this Amendment will apply to one of them. I doubt whether the widows to whom this Amendment would apply are in straitened circumstances. Let us consider the facts. The income up to £135 is entirely relieved of Income Tax. I wish that the widows in my constituency had got that amount or anything like it. We are told that this Amendment would cost £150,000. To whom is that to he given? Is it to the widows of the private soldiers? Let the straitened Member for Peebles tell us. What right have we to make this exemption? What have the Labour party got for the widows of men who died in industry? Who is going to pay for this exemption? It is to be paid out of
general taxation, and it will make the cost of living higher, and the position of the widow who has got no pension more intolerable. That is as clear as clear can be. One of the reasons for the high cost of living to-day is the system of pensions. It costs us an enormous sum of money. Where are we to get it? I do not in the least object to the interruptions of the Labour party. This is a point they will make on their platforms. But do not let them forget to say how much this is to cost the country and who is to get the benefit.
I hope the Chancellor of the Exchequer will stand firm. If he yields to all these ideas and all this sentiment, where are we going? How infinitely better placed are these widows than 90 per cent. of the other widows of the country! I ask the Noble Lady who represents the Sutton Division of Plymouth (Viscountess Astor) what about the widows in her constituency who have no pensions at all?

Viscountess ASTOR: I would like to answer now.

Mr. HOHLER: No, no. I wonder what the hon. Member says about the widows who are unemployed. Why are they unemployed? Because there is no money to employ them. Let her consider these things and speak straightly to her constituents when explaining how she voted. If she is in any doubt about it, let her ask me to come down and support her. I protest that this Amendment is wholly out of order in regard to a Finance Bill. We are not considering sympathies that appeal to the heart, but the finances of this country. Rightly or wrongly, we have determined that a person with an income of £135 a year shall be free from tax. I think that is right. If there are children there is a further allowance. What we have to consider is, what is justice to all the widows of this country? If a widow had not become a widow as a result of the War, she would have received no pension at all. As a result of the War, a soldier's or sailor's widow has received a pension. Surely that is more than any other widow has got, as a right. Presume the widow is getting £135 a year. She is free of tax, and up to £500 she pays only 2s.6d. in the pound. Let us consider all these facts, and is there a Member of the Committee who, having considered them, will, in the present financial stringency, propose to
extend these exemptions? [HON. MEMBERS: "Yes!"] Those who would do so, do not consider other members of the public. We have to raise this money front the taxation of the people, and it is pressing intolerably on them, and more particularly on the poorest of the poor. I protest against the notion put forward that this is only a small sum. We have acted generously and rightly by these widows, and I believe they recognise they have been dealt with fairly. I believe this is purely and simply a "stunt" for election purposes by the Labour party, and I trust the Chancellor will stick to his guns. [HON. MEMBERS: "Divide!"]

Lieut.-Colonel J. WARD: I was in the Committee when this Debate began and when there were not more than 14 or 15 Members present. I have since listened to the speeches of half-a-dozen Members who were not present during any other part of the Debate. I attempted to catch the Chairman's eye once or twice, but gave it up, thinking I had better wait until the last lap and until every one anxious to speak had finished. It is a singular advantage to have the opportunity of following my hon. and learned Friend the Member for Gillingham (Mr. Hohler) in the speech which has just been delivered. He states this Amendment is put forward by the Labour party as a mere election "stunt" That must be untrue, as my hon. and learned Friend would have seen, if he had considered the terms of the Amendment for a moment or even if he had known what he was speaking about. The Labour party naturally would desire to appeal to the poorest section of the community. The hon. and learned Member himself demonstrated that this proposal was not applicable to the poorest widows. I should think it affects scarcely one per cent. of the widows of private soldiers—I doubt if it affects any of them.
In fact, the right hon. Baronet the Member for the City of London twitted the Labour party on proposing to extract taxes from the poorer citizen and contribute them to the relief of the more wealthy section of the community. The right hon. Baronet went on to give us a cue as to the method of deciding this matter. It is not by pettifogging legal disquisitions from one side or the other that the matter can be arranged, nor is it a question of how much the cost will be. To begin with, it is estimated that the
highest figure—even including the proposals in the Amendments ancillary to that which we are discussing—will not represent a cost to the Exchequer of more than £150,000 a year, this year or any year, and it would be a reducing amount for practically every year after this. Why is this claim made, and why, though it does not appeal to the section of the community to which I belong, do I support it? I look upon the widow whose husband lost his life upon the battlefield as being in a distinctly different position, whether rich or poor, from any other class of the community engaged in this great War. Irrespective altogether of the income of the family, this is, as it were, a special recognition at last by the State of the peculiarly tragic circumstances of the case.
While I am very anxious that the Committee should be given a chance of dividing upon this question, even if we carried this Clause the Government would not be defeated. I am certain that the common-sense of the Cabinet would admit that, under the circumstances, the House of Commons, as the trustee of those who gave their lives in the service of the State, was entitled to take this particular case into special consideration, and I am sure that the Administration would find ways and means to carry it into effect. The House of Commons, representing the widows of these hundreds and thousands of men who gave their lives in the service of the State, ought not to worry over the Labour, Liberal or Tory parties. We stand for the great name of our own country. We are here to do what we can, and we must continue, lest we forget. An hon. and gallant Gentleman, who spoke just now, said he was afraid that there was a tendency, as we got further away from the 11th November, 1918, to forget the services that these men rendered to us, and I fear that there is such a tendency. Whether or not this Clause is applicable peculiarly to those who are in better circumstances, it is, as a contribution of sympathetic consideration from the representatives of the democracy to those people whose circumstances are most tragic, in that the head of the family has been lost in the War, the least we can do for them.

Captain GEE: It is rather unfortunate that I should have to follow the wonder-
ful speech of the hon. and gallant Member who has just sat down. His sentiments are very good, but I venture to disagree with him. I have listened to this Debate, and I hope I shall be able to maintain it at the very high level to which the hon. and gallant Member raised it. The right hon. Member for Peebles (Sir D. Maclean) talked of straitened circumstances. I listened to my political opponents, who here talk about the widow, but who, when outside the House, always talk about the labouring class. One hon. Member said that it was the general consensus of opinion in all quarters of the Committee that this Clause should be passed. I am not in agreement with that, for the very simple reason that, though I have many war widows in my division, I am sorry to say I do not think I have one who pays any Income Tax at all. I wish they did so. It is all very well my Labour friends talking about relief from Income Tax. They pay Income Tax themselves; I do not, and I am looking after the poor individual, the widow of Tommy Atkins and the rank and file who have got no Income Tax to pay. If this Amendment is passed, I can see that their burden is not lightened, and therefore, in the name of justice, I oppose the Amendment. I quite admit I can see my opponents bringing out a placard at the next Election of the Member for East Woolwich as the man who voted for taxation of War widows, but I am not going to be led away by that. I am going to do what I believe to be fair and what is right, and as a very humble representative of a very poor constituency I am going to vote against this Amendment, because by doing so I believe I am helping to reduce the already heavy burdens that the War widow has got to bear.

Mr. FORD: I very much regret the attitude of the hon. and gallant Member for East Woolwich (Captain Gee). Taking this question on broad lines, it seems to me that there is one great difference to bear in mind. We have had many appeals for exemption from taxation, but there is this broad difference in this case. I do not care to what class the people belong or what is their income, those who are dependants or relatives of people who have given their lives for their country in the War deserve, I think, exceptional treatment. It is a great mistake, and I
think my hon. Friend the Member for East Woolwich has fallen into it, to say in regard to people who have got obligations as to the education of their families, as to dependants, and so on, that, when they get pensions or allowances for war service made to them, these things ought to be assessed and treated as if they were not derived from the results of a sacrifice of some member of their family. I am quite convinced that, however much we may steel our hearts against the appeals that otherwise would seem just, we must recognise the sacrifices made for the country. After all that was said to every class, that whoever went out and fought and suffered for his country would be put in no worse position than before, we must remember these pledges, and we must remember that the people who gave their lives for their country have put themselves and their families in an entirely different category from anybody else. For this reason, I appeal to the Committee to support the Amendment.

11.0 P.M.

Viscountess ASTOR: Before we go into the Lobby, I should like to remind some of the hon. Members who were not here that this is a question of justice

between the men and the women. That has been pointed out by far abler speakers than I am. There is no greater suffering in this country than there is among the widows of the officers, and this Amendment affects the widows of the officers. It will cost us very little, but it will really help hundreds of women who are making a gallant struggle, and who are too proud to let the world know what they are suffering. If you do this, you will help people who cannot speak for themselves. It will cost so little that I am amazed the Chancellor of the Exchequer does not see it himself. He gave way on such big things to-day, that really £100,000 is very little for a rich and prosperous Government to give. Some day the House has got to face the question of widows' pensions from the national point of view. I ask hon. Members to stand by the widows, as well as by the men who have been disabled, and not to be put off by the Government.

Question put, "That the Clause be, read a Second time."

The Committee divided: Ayes, 132; Noes, 231.

Division No 179.]
AYES
[11.2 p.m.


Adamson, Rt. Hon. William
Finney, Samuel
Mitchell, Sir William Lane


Age-Gardner, Sir James Tynte
Foot, Isaac
Mosley, Oswald


Ashley, Colonel Wilfrid W.
Ford, Patrick Johnston
Murray, Hon. A. C. (Aberdeen)


Astor, Viscountess
Forestier-Walker, L.
Murray, Dr. D. (Inverness & Ross)


Banton, George
Foxcroft, Captain Charles Talbot
Myers, Thomas


Barker, Major Robert H.
Galbraith, Samuel
Nall, Major Joseph


Barker, G. (Monmouth, Abertillery)
Gillis, William
Naylor, Thomas Ellis


Barnes, Major H. (Newcastle, E.)
Goff, Sir R. Park
Newbould, Alfred Ernest


Barrand, A. R.
Gould, James C.
Newman, Sir R. H. S. D. L. (Exeter)


Barton, Sir William (Oldham)
Goulding, Rt. Hon. Sir Edward A.
Nield, Sir Herbert


Benn, Captain Wedgwood (Leith)
Gretton, Colonel John
Norman, Major Rt. Hon. Sir Henry


Bigland, Alfred
Gritten, W. G. Howard
Norris, Colonel Sir Henry G.


Birchall, J. Dearman
Grundy, T. W.
O'Grady, Captain James


Bird, Sir R. B. (Wolverhampton, W.)
Guest, J. (York, W. R., Hemsworth)
Palmer, Brigadier-General G. L.


Blair, Sir Reginald
Gwynne, Rupert S.
Parkinson, John Allen (Wigan)


Bowerman, Rt. Hon. Charles W.
Hall, F. (York, W. R., Normanton)
Percy, Lord Eustace (Hastings)


Bowyer, Captain G. W. E.
Harmsworth, Hon. E. C. (Kent)
Perring, William George


Bramsdon, Sir Thomas
Hartshorn, Vernon
Philipps, Gen. Sir I. (Southampton)


Briant, Frank
Hayday, Arthur
Picketing, Colonel Emil W.


Bromfield, William
Hayward, Evan
Polson, Sir Thomas A.


Butcher, Sir John George
Henderson, Lt.-Col. V. L. (Tradeston)
Rae, Sir Henry N.


Cairns, John
Hills, Major John Waller
Raffan, Peter Wilson


Carter, W. (Nottingham, Mansfield)
Hirst, G. H.
Remnant, Sir James


Casey, T. W.
Hoare, Lieut.-Colonel Sir S. J. G.
Rendall, Athelstan


Cecil, Rt. Hon. Lord R, (Hitchin)
Hogge, James Myles
Richardson, Sir Alex. (Gravesend)


Child, Brigadier-General Sir Hill
Holmes, J. Stanley
Richardson, Lt.-Col. Sir P. (Chertsey)


Colfox, Major Wm. Phillips
Hunter, General Sir A. (Lancaster)
Richardson, R. (Houghton-le-Spring)


Collins, Sir Godfrey (Greenock)
Irving, Dan
Rose, Frank H.


Cope, Major William
John, William (Rhondda, West)
Royce, William Stapleton


Cowan, D. M. (Scottish Universities)
Jones, Morgan (Caerphilly)
Seely, Major-General Rt. Hon. John


Curzon, Captain Viscount
Joynson-Hicks, Sir William
Short, Alfred (Wednesbury)


Davidson, Major-General Sir J. H.
Kelley, Major Fred (Rotherham)
Sitch, Charles H.


Davies, A. (Lancaster, Ciltheroe)
Kenworthy, Lieut.-Commander J. M.
Smith, Sir Allan M. (Croydon, South)


Davies, Alfred Thomas (Lincoln)
Kenyon, Barnet
Sprot, Colonel Sir Alexander


Davies, David (Montgomery)
Kiley, James Daniel
Sueter, Rear-Admiral Murray Fraser


Davies, Evan (Ebbw Vale)
Kinloch-Cooke, Sir Clement
Surtees, Brigadier-General H. C.


Davies, Sir William H. (Bristol, S.)
Locker-Lampson, G. (Wood Green)
Swan, J. E.


Davison, Sir W. H. (Kensington, S.
Lunn, William
Thomas, Brig.-Gen. Sir O. (Anglesey)


Dockrell, Sir Maurice
Maclean, Rt. Hn. Sir D. (Midlothian)
Thomas, Sir Robert J. (Wrexham)


Doyle, N. Grattan
Mallalieu, Frederick William
Thomson, T. (Middlesbrough, West)


Edwards, C. (Monmouth, Bedwellty)
Marks. Sir George Croydon
Walsh, Stephen (Lancaster, Ince)


Ward, Col. J. (Stoke-upon-Trent)
Williams, Col. P. (Middlesbrough, E.)
Wood, Major M. M. (Aberdeen, C.)


Watts-Morgan, Lieut.-Col. D.
Wilson, Rt. Hon. J. W. (Stourbridge)



White, Charles F. (Derby, Western)
Windsor, Viscount
TELLERS FOR THE AYES.—


Wignall, James
Wolmer, Viscount
Mrs. Wintringham and Mr. Lawson.


NOES.


Ainsworth, Captain Charles
Guest, Capt. Rt. Hon. Frederick E.
Pease, Rt. Hon. Herbert Pike


Allen, Lieut.-Col. Sir William James
Guthrie, Thomas Maule
Peel, Col. Hn. S. (Uxbridge, Mddx.)


Amery, Rt. Hon. Leopold C. M. S.
Hacking, Captain Douglas H.
Perkins, Walter Frank


Armstrong, Henry Bruce
Hall, Lieut.-Col. Sir F. (Dulwich)
Pinkham, Lieut.-Colonel Charles


Atkey, A. R.
Hall, Rr-Adml Sir W. (Liv'p'l,W.D'by)
Pollock, Rt. Hon. Sir Ernest Murray


Baird, Sir John Lawrence
Hamilton, Sir George C.
Pownall, Lieut.-Colonel Assheton


Baldwin, Rt. Hon. Stanley
Hannon, Patrick Joseph Henry
Pratt, John William


Balfour, George (Hampstead)
Harmsworth, C. B. (Bedford, Luton)
Prescott, Major Sir W. H.


Banbury, Rt. Hon. Sir Frederick G.
Haslam, Lewis
Pretyman, Rt. Hon. Ernest G.


Barlow, Sir Montague
Hennessy, Major J. R. G.
Purchase, H. G.


Barnett, Major Richard W.
Herbert, Dennis (Hertford, Watford)
Remer, J. R,


Barnston, Major Harry
Hinds, John
Renwick, Sir George


Barrie, Sir Charles Coupar (Banff)
Hohler, Gerald Fitzroy
Roberts, Rt. Hon. G. H. (Norwich)


Bartley-Denniss, Sir Edmund Robert
Hood, Sir Joseph
Roberts, Sir S. (Sheffield, Ecclesall)


Bell, Lieut.-Col. W. C. H. (Devizes)
Hope, Sir H. (Stirling & Cl'ckm'nn, W.)
Robinson, S. (Brecon and Radnor)


Bellairs, Commander Carlyon W.
Hope, Lt.-Col. Sir J. A. (Midlothian)
Robinson, Sir T. (Lancs., Stretford)


Benn, Sir A. S. (Plymouth, Drake)
Hope, J. D. (Berwick & Haddington)
Samuel, A. M. (Surrey, Farnham)


Bennett, Sir Thomas Jewel(
Hopkins, John W. W.
Samuel, Samuel (W'dsworth, Putney)


Bethell, Sir John Henry
Hopkinson, A. (Lancaster, Mossley)
Sanders, Colonel Sir Robert Arthur


Blake, Sir Francis Douglas
Horne, Edgar (Surrey, Guildford)
Sassoon, Sir Philip Albert Gustave D.


Blane, T. A.
Horne, Sir R. S. (Glasgow, Hillhead)
Scott, A. M. (Glasgow, Bridgeton)


Borwick, Major G. O.
Hurd, Percy A.
Scott, Sir Leslie (Liverp'l, Exchange)


Boscawen, Rt. Hon. Sir A. Griffith-
Hurst, Lieut.-Colonel Gerald B.
Seddon, J. A.


Brassey, H. L. C.
Inskip, Thomas Walker H.
Shaw, Hon. Alex. (Kilmarnock)


Breese, Major Charles E.
Jackson, Lieut.-Colonel Hon. F. S.
Shaw, William T. (Forfar)


Bridgeman, Rt. Hon. William Clive
James, Lieut.-Colonel Hon. Cuthbert
Shortt, Rt. Hon. E. (N'castle-on-T.)


Briggs, Harold
Jameson, John Gordon
Simm, M. T.


Broad, Thomas Tucker
Jodrell, Neville Paul
Smith, Sir Harold (Warrington)


Brotherton, Colonel Sir Edward A.
Johnstone, Joseph
Stanley, Major Hon. G. (Preston)


Brown, Brig.-Gen. Clifton (Newbury)
Jones, Henry Haydn (Merioneth)
Stanton, Charles Butt


Bruton, Sir James
Jones, J. T. (Carmarthen, Llanelly)
Starkey, Captain John Ralph


Buckley, Lieut.-Colonel A.
Kellaway, Rt. Hon. Fredk. George
Steel, Major S. Strang


Bull, Rt. Hon. Sir William James
Kidd, James
Stephenson, Lieut.-Colonel H. K.


Burdon, Colonel Rowland
King, Captain Henry Douglas
Stewart, Gershom


Burgoyne, Lt.-Col. Sir Alan Hughes
Lane-Fox, G. R.
Strauss, Edward Anthony


Burn, Col. C. R. (Devon, Torquay)
Larmor, Sir Joseph
Sturrock, J. Leng


Carter, R. A. D. (Man., Withington)
Law, Alfred J. (Rochdale)
Sugden, W. H.


Cautley, Henry Strother
Lewis, Rt. Hon. J. H. (Univ., Wales)
Sutherland, Sir William


Chamberlain, N. (Birm., Ladywood)
Lindsay, William Arthur
Sykes, Sir Charles (Huddersfield)


Churchman, Sir Arthur
Lloyd, George Butler
Taylor, J.


Clay, Lieut.-Colonel H. H. Spender
Locker-Lampson, Com. D. (H'tingd'n)
Thomson, F. C. (Aberdeen, South)


Clough, Sir Robert
Lorden, John William
Thomson, Sir W. Mitchell-(Maryhill)


Coats, Sir Stuart
Lort-Williams, J
Thorpe, Captain John Henry


Cockerill, Brigadier-General G. K.
Lowther, Major C. (Cumberland, N.)
Townley, Maximilian G.


Colvin, Brig.-General Richard Beale
Lyle, C. E. Leonard
Tryon, Major George Clement


Cory, Sir C. J. (Cornwall, St. Ives)
Mackinder, Sir H. J. (Camlachie)
Turton, Edmund Russborough


Dalzlet, Sir D. (Lambeth, Brixton)
McLaren, Robert (Lanark, Northern)
Vickers, Douglas


Davidson,J, C. C. (Hemel Hempstead)
M'Lean, Lieut.-Col. Charles W. W.
Wallace, J.


Davies, Sir David Sanders (Denbigh)
McMicking, Major Gilbert
Walters, Rt. Hon. Sir John Tudor


Dawson, Sir Philip
Macnaghten, Sir Malcolm
Walton, J. (York, W. R., Don Valley)


Dewhurst, Lieut.-Commander Harry
Macpherson, Rt. Hon. James I.
Ward, Col. L. (Kingston-upon-Hull)


Du Pre, Colonel William Baring
Malone, Major P. B. (Tottenham, S.)
Ward, William Dudley (Southampton)


Edgar, Clifford B.
Manville, Edward
Waring, Major Walter


Edge, Captain Sir William
Marriott, John Arthur Ransome
Warner, Sir T. Courtenay T.


Evans, Ernest
Martin, A. E.
Watson, Captain John Bertrand


Eyres-Monsell, Com. Bolton M.
Matthews, David
Weston, Colonel John Wakefield


Falcon, Captain Michael
Middlebrook, Sir William
Wheler, Col. Granville C. H.


Falle, Major Sir Bertram Godfrey
Molson, Major John Elsdale
White, Col. G. D. (Southport)


Fell, Sir Arthur
Mond, Rt. Hon. Sir Alfred Moritz
Willey, Lieut.-Colonel F. V.


Fildes, Henry
Moore-Brabazon, Lieut.-Col. J. T. C.
Williams, C. (Tavistock)


Fisher, Rt. Hon. Herbert A. L.
Morden, Col. W. Grant
Willoughby, Lieut.-Col. Hon. Claud


Foreman, Sir Henry
Moreing, Captain Algernon H.
Wilson, Lt.-Col. Sir M. (Bethnal Gn)


Forrest, Walter
Morrison, Hugh
Wilson, Col. M. J. (Richmond)


France, Gerald Ashburner
Munro, Rt. Hon. Robert
Winterton, Earl


Fraser, Major Sir Keith
Murchison, C. K.
Wise, Frederick


Fremantle, Lieut.-Colonel Francis E.
Murray, Rt. Hon. C. D. (Edinburgh)
Wood. Hon. Edward F. L. (Ripon)


Ganzoni, Sir John
Murray, John (Leeds, West)
Wood, Sir H. K. (Woolwich, West)


Gee, Captain Robert
Neal, Arthur
Wood, Sir J. (Stalybridge & Hyde)


George, Rt. Hon. David Lloyd
Newman, Colonel J. R. P. (Finchley)
Worsfold, T. Cato


Gibbs, Colonel George Abraham
Newson, Sir Percy Wilson
Worthington-Evans, Rt. Hon, Sir L.


Gilbert. James Daniel
Newton, Sir D. G. C. (Cambridge)
Yes, Sir Alfred William


Gilmour, Lieut.-Colonel Sir John
Nicholson, Brig.-Gen. J. (Westminster)
Young, Sir Frederick W. (Swindon)


Gray, Major Ernest (Accrington)
Nicholson, Reginald (Doncaster)
Younger, Sir George


Green, Joseph F. (Leicester, W.)
Nicholson, William G. (Petersfield)



Greene, Lt.-Col. Sir W. (Hack'y, N.)
Norton-Griffiths, Lieut.-Col. Sir John
TELLERS FOR THE NOES.—


Greenwood, Rt. Hon. Sir Hamar
Ormsby-Gore, Hon. William
Colonel Leslie Wilson and Mr.


Greig, Colonel Sir James William
Parker, James
McCurdy.


Grenfell Edward Charles
Pearce, Sir William

NEW CLAUSE.—(Amendment of 10 & 11 Geo. V., c. 18, s. 21.)

Section twenty-one of the Finance Act, 1920 (which provides for a deduction from assessable income in respect of children), shall have effect as if for the words "thirty-six pounds" and "twenty-seven pounds" there were substituted, respectively, the words "forty-five pounds" and "thirty pounds."—[Mr. Rose.]

Brought up, and read the First time.

Mr. ROSE: I beg to move "That the Clause be read a Second time."
This proposal needs very little explanation. My proposal is to substitute an allowance of £45 for £36 in the first case and £30 for £27 in the second case in Section 21 of the Finance Act, 1920. This is a proposal which will affect the poorer class of Income Tax payers, and it is on their behalf that this new Clause is being moved. The whole matter has been thrashed out here before and there is no need to discuss it any further now.

Mr. HAYDAY: I rise to support this new Clause. [HON. MEMBERS: "What is it?"] It is quite natural that one with a knowledge of the infliction which is imposed upon those responsible for the rearing of children should support this proposal. I certainly feel that the Chancellor of the Exchequer will have great sympathy for this proposal. I certainly feel that the Chancellor of the Exchequer will have great sympathy with those who are seeking relief under this Clause, the assumption being that the relief is given on an estimate as to the cost of the upkeep and maintenance of the child or children for whom the relief is obtained during the year. When one considers that it costs considerably more than the allowance under the present system, I feel that whatever may be

the difficulties of the Chancellor of the Exchequer, the difficulties of those who have to make this provision, unless they get the relief we suggest, are manifestly much greater. The amount of £27 per annum for the second child and onwards, as relief, is utterly inadequate. It may be that hon. Members are looking upon me as a special pleader in this instance on behalf of those who, perhaps, are called upon to suffer to a much greater extent; but I feel after the approval they have expressed of my sentiments we may hope that when the Clause goes to a Division—should that be necessary—those who have so spontaneously endorsed my appeal and are evidently now able to grip the substance of my argument, will see that the Clause is carried, even should the Chancellor of the Exchequer refuse to accept it.

Sir R. HORNE: My hon. Friend has been talking of intricate matters, with which I am very sadly unacquainted. He claimed my sympathy, but what I would beg to tender to him is my hearty admiration. It is quite true that these often romantic matters, when it comes to the question of the Exchequer, begin to sound in terms of pounds, shillings and pence, and the Amendment of which it is sought to obtain the approval of the Committee to-night would cost altogether £1,200,000. That is on the assumption that the average family does not amount to more than three. I hope my hon. Friend will not think me very hard-hearted if I am not able to follow him with the same enthusiasm that he has displayed.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 56; Noes, 283.

Division No. 180.]
AYES.
[11.20 p.m.


Adamson, Rt. Hon. William
Hartshorn, Vernon
Rendall, Athelstan


Banton, George
Hayward, Evan
Richardson, R. (Houghton-le-Spring)


Barker, G. (Monmouth, Abertillery)
Hills, Major John Waller
Royce, William Stapleton


Barnes, Major H. (Newcastle, E.)
Hirst, G. H.
Short, Alfred (Wednesbury)


Barton, Sir William (Oldham)
Hogge, James Myles
Sitch, Charles H.


Bowerman, Rt. Hon. Charles W.
Holmes, J. Stanley
Swan, J. E.


Bramsdon, Sir Thomas
Irving, Dan
Thomas, Brig.-Gen. Sir O. (Anglesey)


Briant, Frank
John, William (Rhondda, West)
Thomson, T. (Middlesbrough, West)


Bromfield, William
Jones, Morgan (Caerphilly)
Walsh, Stephen (Lancaster, Ince)


Cairns, John
Kenworthy, Lieut.-Commander J. M
Ward, Col. J. (Stoke upon Trent)


Carter, W. (Nottingham, Mansfield)
Lawson, John James
Watts-Morgan, Lieut.-Col. D.


Collins, Sir Godfrey (Greenock)
Lunn, William
White, Charles F. (Derby, Western)


Davies, A. (Lancaster, Clitheroe)
Maclean, Rt. Hn. Sir D. (Midlothian)
Wignall, James


Edwards, C. (Monmouth, Bedwellty)
Mosley, Oswald
Williams, Col. P. (Middlesbrough, E.)


Finney, Samuel
Murray, Dr. D. (Inverness & Ross)
Wintringham, Margaret


Foot, Isaac
Myers, Thomas
Wood, Major M. M. (Aberdeen, C.)


Gillis, William
Naylor, Thomas Ellis



Grundy, T. W.
Newbould, Alfred Ernest
TELLERS FOR THE AYES.—


Guest, J. (York, W. R., Hemsworth)
O'Grady, Captain James
Mr. Rose and Mr. Hayday.


Hall, F. (York, W.R., Normanton)
Raffan, Peter Wilson



NOES.


Adkins, Sir William Ryland Dent
Foxcroft, Captain Charles Talbot
Mond, Rt. Hon. Sir Alfred Moritz


Agg-Gardner, Sir James Tynte
France, Gerald Ashburner
Moore-Brabazon, Lieut.-Col. J. T. C.


Ainsworth, Captain Charles
Fraser, Major Sir Keith
Morden, Col. W. Grant


Allen, Lieut.-Col. Sir William James
Fremantle, Lieut.-Colonel Francis E.
Moreing, Captain Algernon H.


Amery, Rt. Hon. Leopold C. M. S.
Ganzoni, Sir John
Morrison, Hugh


Armstrong, Henry Bruce
Gee, Captain Robert
Morrison-Bell, Major A. C.


Ashley, Colonel Wilfrid W.
George, Rt. Hon. David Lloyd
Munro, Rt. Hon. Robert


Astor, Viscountess
Gibbs, Colonel George Abraham
Murchison, C. K.


Atkey, A. R.
Gilbert, James Daniel
Murray, Hon. A. C. (Aberdeen)


Baird, Sir John Lawrence
Gilmour, Lieut.-Colonel Sir John
Murray, Rt. Hon. C. D. (Edinburgh)


Balfour, George (Hampstead)
Gould, James C.
Murray, John (Leeds, West)


Banbury, Rt. Hon. Sir Frederick G.
Goulding, Rt. Hon. Sir Edward A.
Neal, Arthur


Barker, Major Robert H.
Gray, Major Ernest (Accrington)
Newman, Colonel J. R. P. (Finchley)


Barlow, Sir Montague
Green, Joseph F. (Leicester, W.)
Newman, Sir R. H. S. D. L. (Exeter)


Barnett, Major Richard W.
Greene, Lt.-Col, Sir W. (Hack'y, N.)
Newson, Sir Percy Wilson


Barnston, Major Harry
Greenwood, Rt. Hon. Sir Hamar
Newton, Sir D. G. C. (Cambridge)


Barrand, A. R.
Greig, Colonel Sir James William
Nicholson, Brig.-Gen. J. (Westminster)


Barrie, Sir Charles Coupar (Banff)
Grenfell Edward Charles
Nicholson, Reginald (Doncaster)


Bell, Lieut.-Col. W. C. H. (Devizes)
Gretton, Colonel John
Nicholson, William G. (Petersfield)


Bellairs, Commander Canyon W.
Gritten, W. G. Howard
Nield, Sir Herbert


Benn, Sir A. S. (Plymouth, Drake)
Guest, Capt. Rt. Hon. Frederick E.
Norman, Major Rt. Hon. Sir Henry


Bennett, Sir Thomas Jewell
Guthrie, Thomas Maule
Norton-Griffiths, Lieut.-Col. Sir John


Betterton, Henry B.
Gwynne, Rupert S.
Ormsby-Gore, Hon. William


Birchall, J. Dearman
Hacking, Captain Douglas H.
Palmer, Major Godfrey Mark


Bird, Sir R. B. (Wolverhampton, W.)
Hall, Lieut.-Col Sir F. (Dulwich)
Palmer, Brigadier-General G. L.


Blake, Sir Francis Douglas
Hall, Rr-Adml Sir W. (Llv'p'l,W. D'by)
Parker, James


Blane, T. A.
Hamilton, Sir George C.
Parry, Lieut.-Colonel Thomas Henry


Berwick, Major G. O.
Hannon, Patrick Joseph Henry
Pease, Rt. Hon. Herbert Pike


Boscawen, Rt. Hon. Sir A. Griffith-
Harmsworth, C. B. (Bedford, Luton)
Peel, Col. Hon. S. (Uxbridge, Mddx.)


Bowyer, Captain G. W. E.
Harmsworth, Hon. E. C. (Kent)
Perkins, Walter Frank


Brassey, H. L. C.
Haslam, Lewis
Philipps, Gen. Sir I. (Southampton)


Breese, Major Charles E.
Henderson, Lt.-Col. V. L. (Tradeston)
Pickering, Colonel Emil W.


Bridgeman, Rt. Hon. William Clive
Hennessy, Major J. R. G.
Pinkham, Lieut.-Colonel Charles


Briggs, Harold
Herbert, Dennis (Hertford, Watford)
Pollock, Rt. Hon. Sir Ernest Murray


Broad, Thomas Tucker
Hinds, John
Polson, Sir Thomas A.


Brotherton, Colonel Sir Edward A.
Hoare, Lieut.-Colonel Sir S. J. G.
Pownall, Lieut.-Colonel Assheton


Brown, Brig.-Gen. Clifton (Newbury)
Hohler, Gerald Fitzroy
Pratt, John William


Bruton, Sir James
Holbrook, Sir Arthur Richard
Pretyman, Rt. Hon. Ernest G.


Buckley, Lieut.-Colonel A.
Hood, Sir Joseph
Purchase, H. G.


Burdon, Colonel Rowland
Hope, Sir H. (Stirling & Cl'ckm'nn, W.)
Rae, Sir Henry N.


Burgoyne, Lt.-Col. Sir Alan Hughes
Hope, Lt.-Col. Sir J. A. (Midlothian)
Remer, J. R.


Burn, Col. C. R. (Devon, Torquay)
Hope, J. D. (Berwick & Haddington)
Remnant, Sir James


Campion, Lieut.-Colonel W. R.
Hopkins, John W. W.
Renwick, Sir George


Carr, W. Theodore
Horne, Edgar (Surrey, Gulldford)
Richardson, Sir Alex. (Gravesend)


Casey, T. W.
Horne, Sir R. S. (Glasgow, Hillhead)
Richardson, Lt.-Col. Sir P. (Chertsey)


Cautley, Henry Strother
Howard, Major S. G.
Roberts, Rt. Hon. G. H. (Norwich)


Cecil, Rt. Hon. Sir Evelyn (Aston)
Hunter, General Sir A. (Lancaster)
Roberts, Samuel (Hereford, Hereford)


Chamberlain, N. (Birm., Ladywood)
Hurd, Percy A.
Roberts, Sir S. (Sheffield, Ecclesall)


Child, Brigadier-General Sir Hill
Inskip, Thomas Walker H.
Robinson, S. (Brecon and Radnor)


Clay, Lieut.-Colonel H. H. Spender
Jackson, Lieut.-Colonel Hon. F. S.
Robinson, Sir T. (Lancs., Stretford)


Clough, Sir Robert
Jameson, John Gordon
Roundell, Colonel R. F.


Coats, Sir Stuart
Jephcott, A. R.
Samuel, A. M. (Surrey, Farnham)


Cockerill, Brigadier-General G. K.
Johnstone, Joseph
Samuel, Samuel (W'dsworth, Putney)


Colfox, Major Wm. Phillips
Jones, Henry Haydn (Merioneth)
Sanders, Colonel Sir Robert Arthur


Colvin, Brig.-General Richard Beale
Jones, J. T. (Carmarthen, Llanelly)
Sassoon, Sir Philip Albert Gustave D.


Cope, Major William
Joynson-Hicks, Sir William
Scott, A. M. (Glasgow, Bridgeton)


Cory, Sir C. J. (Cornwall, St. Ives)
Kellaway, Rt. Hon. Fredk. George
Scott, Sir Leslie (Liverp'l, Exchange)


Cowan, D. M. (Scottish Universities)
Kidd, James
Seddon, J. A.


Curzon, Captain Viscount
King, Captain Henry Douglas
Seely, Major-General Rt. Hon. John


Davidson, Major-General Sir J. H.
Kinloch-Cooke, Sir Clement
Shaw, Hon. Alex. (Kilmarnock)


Davies, Alfred Thomas (Lincoln)
Lane-Fox, G. R.
Shaw, William T. (Forfar)


Davies, David (Montgomery)
Larmor, Sir Joseph
Shortt, Rt. Hon. E. (N'castle-on-T.)


Davies, Sir David Sanders (Denbigh)
Law, Alfred J. (Rochdale)
Simm, M. T.


Davies, Thomas (Cirencester)
Lewis, Rt. Hon. J. H. (Univ., Wales)
Smith, Sir Allan M. (Croydon, South)


Davison, Sir W. H. (Kensington, S.)
Lindsay, William Arthur
Smith, Sir Harold (Warrington)


Dawson, Sir Philip
Lloyd, George Butler
Sprot, Colonel Sir Alexander


Dewhurst, Lieut-Commander Harry
Locker-Lampson, G. (Wood Green)
Stanley, Major Hon. G. (Preston)


Doyle, N. Grattan
Locker-Lampson, Com. O. (H'tingd'n)
Stanton, Charles Butt


Du Pre, Colonel William Baring
Lorden, John William
Starkey, Captain John Ralph


Edgar, Clifford B.
Lort-Williams, J.
Steel, Major S. Strang


Edge, Captain Sir William
Lowther, Major C. (Cumberland, N.)
Stephenson, Lieut.-Colonel H. K.


Ednam, Viscount
Lyle, C. E. Leonard
Stewart, Gershom


Erskine, James Malcolm Monteith
McLaren, Hon. H. D. (Leicester)
Strauss, Edward Anthony


Evans, Ernest
McLaren, Robert (Lanark, Northern)
Sturrock, J. Leng


Eyres-Monsell, Com. Bolton M.
M'Lean, Lieut.-Col. Charles W. W.
Sueter, Rear-Admiral Murray Fraser


Falcon, Captain Michael
Macnaghten, Sir Malcolm
Sugden, W. H.


Falle, Major Sir Bertram Godfray
McNeill, Ronald (Kent, Canterbury)
Surtees, Brigadier-General H. C.


Fell, Sir Arthur
Macpherson, Rt. Hon. James I.
Sutherland, Sir William


Flides, Henry
Malone, Major P. B. (Tottenham, S.)
Sykes, Sir Charles (Huddersfield)


Fisher, Rt. Hon. Herbert A. L.
Manville, Edward
Taylor, J.


Ford, Patrick Johnston
Marriott, John Arthur Ransome
Thomas, Sir Robert J. (Wrexham)


Foreman, Sir Henry
Martin, A. E.
Thomson, F. C. (Aberdeen, South)


Forestier-Walker, L.
Matthews, David
Thomson, Sir W. Mitchell- (Maryhill)


Forrest, Walter
Mitchell, Sir William Lane
Thorpe, Captain John Henry




Townley, Maximilian G.
Weston, Colonel John Wakefield
Wolmer, Viscount


Tryon, Major George Clement
Wheler, Col. Granville C. H.
Wood, Hon. Edward F L. (Ripon)


Turton, Edmund Russborough
White, Col. G. D. (Southport)
Wood, Sir H. K. (Woolwich, West)


Vickers, Douglas
Willey, Lieut.-Colonel F. V.
Wood, Sir J. (Stalybridge & Hyde)


Wallace, J.
Williams, C. (Tavistock)
Worthington-Evans, Rt. Hon. Sir L.


Walters, Rt. Hon. Sir John Tudor
Willoughby, Lieut.-Col. Hon. Claud
Yeo, Sir Alfred William


Walton, J. (York, W. R., Don Valley)
Wilson, Lt.-Col. Sir M. (Bethnal Gn.)
Young, Sir Frederick W. (Swindon)


Ward, Col. L. (Kingston-upon-Hull)
Wilson, Col. M. J. (Richmond)
Younger, Sir George


Waring, Major Walter
Windsor, Viscount



Warner, Sir T. Courtenay T.
Winterton, Earl
TELLERS FOR THE NOES.—


Watson, Captain John Bertrand
Wise, Frederick
Colonel Leslie Wilson and Mr.




McCurdy.

NEW CLAUSE.—(Amendment of 10 & 11 Geo. V., c. 18, s. 20.)

Section twenty of the Finance Act, 1920, which provides for a deduction from assessable income in respect of a widowed mother, etc., shall have effect as if for the words "forty-five pounds" there were substituted the words "seventy-five pounds."—[Mr. Myers.]

Brought up, and read the First time.

Mr. MYERS: I beg to move, "That the Clause be read a Second time."
If all the powerful arguments which were advanced on the last Clause failed to move the heart of the Chancellor of the Exchequer, there is very little hope for this new Clause. I am not, however, without some measure of optimism that the Chancellor of the Exchequer and the Committee may make a concession of some importance on this Clause. We believe that this Clause demands the very earnest attention and the most serious consideration of the right hon. Gentleman. If it receives that consideration, we believe that it will have behind it a substantial concession. Section 20 of the Finance Act, 1920, sets forth a number of individuals who come under the exemption of the £45, and these individuals are all put on a level. We suggest that in the case of a widowed mother there is no comparison with the other people referred to in the Section. The support of a widowed mother involves special responsibility. Some of us know of that responsibility from practical experience. It is one which we readily undertake, and if we relieve the community, as we do relieve the community, when we provide a home and shelter for a widowed mother, we are entitled to some special consideration. We suggest that if the Chancellor of the Exchequer will give this matter the consideration which it deserves some concession may result. If he will yield to our claim, as he yielded to other demands earlier in the Debate, there is no fear of what can be done in
this matter. I have heard it freely commented upon that in connection with the first Division which was taken this afternoon, Income Tax and Super-tax payers have received a concession amounting to £500,000, I do not know whether that is true or not, but I am satisfied that a substantial concession was given when that Division took place. If that can be done with the alacrity with which it was done by the Chancellor of the Exchequer, the insignificant sum that will be needed to give the concession provided for in this Clause ought to be readily conceded.

Sir R. HORNE: This Clause was considered on the Finance Bill last year and did not then find acceptance. The considerations which prevailed last year are equally relevant now. In fact, the financial circumstances now are more embarrassing than they were when we were dealing with the matter a year ago. Accordingly I see no reason why the Committee should come to a different opinion now from what it did then. The hon. Member used a phrase which indicated that the concessions would not cease with the case of the widowed mother. He referred to the man who provided for a widowed mother or somebody else to take her place, and said that this extra amount should be granted in such cases. That means that while the Amendment refers merely to the case of the widowed mother, there would be various ramifications by which other people would be brought in. I cannot profess to know where it would stop, but the particular proposal contained in this Amendment would cost the revenue of the present year a sum of £120,000. In these circumstances I need not elaborate any arguments to convince the Committee that the recommendations which the Royal Commission on Income Tax made which are now embodied in our financial system should be departed from so soon unless for very good reasons, which have not been advanced in this case.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 53; Noes, 273.

Sir D. MACLEAN: I think it would be for the convenience of the Committee as a whole if the Chancellor of the Exchequer could indicate how far he intends to go to-night.

Mr. ADAMSON: Before the right hon. Gentleman replies, I should like to put this point to him. As far as the Labour party are concerned, we should like the Chancellor of the Exchequer to go on. It is well known that the Labour party are meeting in their annual conference. There is a large number of our Members who will remain here at considerable inconvenience, and, naturally, they want to take part to the fullest possible extent in the discussions on the Finance Bill. I wish to put that consideration before the Chancellor of the Exchequer before he replies to my right hon. Friend.

Sir R. HORNE: I desire to go as far as possible, but I am conscious of the fact that if any work is to be done to-morrow I must not overstrain the energies of the Committee to-night. I am anxious to meet the convenience of the Committee to the fullest possible extent. It is absolutely necessary, however, that we should at least accomplish the discussion of the Beer Duty to-night. There is another Amendment, following immediately after that in which hon. Members of the
Labour party are interested, and I desire to meet the wishes of the right hon. Gentleman who has just spoken, in regard to it. If he wishes to have that Amendment taken I do not think it would occupy a large amount of time, as it could be discussed with a narrow compass, and we might taken it also before we adjourn.

NEW CLAUSE.—(Reduced Excise Duty on Beer.)

"In lieu of the duty of excise payable in respect of beer brewed in Great Britain or Ireland there shall, as from the twentieth day of April, nineteen hundred and twenty-two, be charged, levied, and paid, the following duty (that is to say):—

£
s.
d.


For every thirty-six gallons of worts of a specific gravity of one thousand and fifty-five degrees
3
10
0

and in lieu of the drawback of excise payable in respect of beer exported from Great Britain or Ireland, as merchandise or for use as ship's stores, there shall be allowed and paid in respect of beer on which it is shown that the increased excise duty charged by this Act has been paid a drawback calculated according to the original gravity thereof (that is to say):—

£
s.
d.


For every thirty-six gallons of beer of an original gravity of one thousand and fifty-five degrees the drawback of
3
10
3


and so, as to both duty and drawback, in proportion for any difference in quantity or gravity."—[Mr. R. Richardson.]

Brought up, and read the First time.

Mr. R. RICHARDSON: I beg to move, "That the Clause be read a Second time."
12. M.
In 1914 the standard barrel of beer was subject to a duty of 7s. 9d. per barrel; to-day, because of the war, that tax has been raised to £5 per standard barrel. In the ordinary finance of the working man that means that the tax on a pint of beer has been raised from 0.72d. to no less than 4£16d., and let the Committee reflect what that means. It means that the man who consumes only one pint of beer per day will, at the end of the year, Shave paid a tax on it to the sum of no less than £7 13s., and surely, in view of the unemployment and dire distress that are obtaining throughout the country, some relief ought to he given him. This is the workers' Income Tax, and if relief can be given in respect of the Income Tax of one class of the community, surely something ought to be done for the working
people. I am one of those Members who believe that the easiest way to set the wheels of industry going again is to reduce the burden of indirect taxation, for all that is saved in taxation of that sort will be spent on the necessaries of life, and more people will be employed in consequence. Many concessions have been made by the Chancellor of the Exchequer this year, but every concession that has been given has been in the interests of the well-to-do. [HON. MEMBERS: "No."] Surely hon. Members will agree that the workers have at least some cause of complaint that, of these millions that have been saved by the reduction of expenditure or by other means, all has gone to one class of the community. They can with truth say that, in the making of the laws there is one law for the rich and another law for the poor. [HON. MEMBERS: "No."] I am not saying that it is so, but examine what has been done and see whether that is not the case. Again, I have a complaint against those who make the beer, and I believe that they could have given the working man some relief. I desire to speak plainly to the hon. and gallant Member for Burton (Colonel Gretton) and the hon. Baronet the Member for Ayr Burghs (Sir G. Younger). In 1920 prices of everything were at their height, but to-day great reductions have taken place in the prices of all the commodities that go to the making of beer and in the wages of the men employed in making beer, and yet no reduction in price has been given to the consumer. I want the Chancellor of the Exchequer to make sure that any reduction that may be made goes to the consumer, for we all know that as the tax was increased on beer, something more than the tax was extracted from the consumer. I sincerely hope the Chancellor of the Exchequer is going to give us some relief, and I want to plead with him to see that whatever is given is given to the consumer and not to the brewers. May I ask my hon. Friends who are connected with this trade to consider their position and to do what justice demands that they should do. Let us have a chance, so that the man who wants a pint of beer can have it at a reasonable price, for surely my temperance friends will not say that £7 13s. 0d. a year on a pint of beer a day is not an excessive tax. Indeed, if no more than a pint of
beer a day were consumed by every individual, there would be no need for prohibition or even for local option, and that is the sort of thing that we are pleading for. With the present price of beer, if one man meets another and says, "Are you going to have a glass of beer?" the other has to say, "I will have one, but I cannot afford to pay for two, and consequently I must go by myself." [Interruption.] I am not a Member who talks about nothing; I always have a case when I speak to this Committee, and I intend when I have got a case to make my voice heard.

Mr. S. ROBERTS: There is among large sections of the people of the country a very strong feeling that the price of a pint of beer is too high. That feeling though not very vocal is felt and expressed strongly amongst the agricultural population of the country. The wages of the agricultural labourer have been reduced 30s. a week, and it is very difficult for a man on that wage to pay 7d. or even 6d. for a pint of beer. The agricultural labourer has been deprived of a beverage to which he thinks he is entitled. The consumption since last Christmas has been falling—I think the Chancellor must realise that—and this must mean a falling revenue. No reduction—it is obvious—of less than one penny per pint is of any use to the consumer. Those officially connected with the industry say that nothing less Shan 30s. reduction is of any use. About that point I am not myself convinced. I had put down an Amendment to reduce the tax not by 30s., but by 15s., with a view to seeing whether there was not some figure at which an arrangement could be come to. Since then I have received communications, both verbal and written, from many different people in many parts of the country, and I have tried to make these figures fit.
The result of my investigation is that at present I am in a complete fog, the chief reason being that the different sets of figures have been worked out in relation to different grades or standards of beer. In one case I am told that the average gravity at 7d. a pint is 10.40, and in another that it is 10.44; this makes a difference of 7s. 3d. in the tax on the barrel. I am informed that in the one case, the 10.40, a 30s. reduction will mean 24s. on the barrel—exactly a penny per
pint—and in the 10.44 it would be 21s. 10d., or less than a penny a pint to the consumer. These written and verbal communications are rendered still more conflicting when people definitely connected with the trade have told me that the trade could make very big concessions if the Treasury would meet them some part of the way. On the other hand trade officials say they can make no concessions at all. The differences arise between the trade estimates and the way the matter is calculated does not help matters. The result is that to find these things out from the point of view of one having no connection with the trade at all is an impossibility. One has to try to look at the matter from the point of view of common sense and common knowledge. The price of beer has not been reduced since 1920, when 30s. per barrel was put on. The cost of production must to some extent have come down, but it has not come down to the extent of other things. Wages are still according to the figure sent to me by one of the trade associations, 140 per cent. above pre-War; the cost of malt is 125 per cent. above pre-War. Rut there must have been some reductions of some kind since the peak prices of 1920. In regard to profits up to this year, at any rate, I do not think that the shareholders of brewery companies need have been under any undue anxiety. Undoubtedly since the beginning of this year, owing to the reduction in consumption, those profits must have been dwindling, and the revenue as a consequence must also have dwindled. The Chancellor of the Exchequer must have figures as to the profits and the cost of production. My own view is that there must be some figure less than 30s., and possibly higher than the 15s., which I have put down in my Amendment at which the trade and the Treasury could possibly strike a bargain. This would be an apparent sacrifice to both, but I doubt whether the sacrifice would be real, because even if it were not a case of increasing consumption it would have the effect of checking the reduction in consumption, and this would bring money to the trade and the Treasury.
I am sure it is too elementary a statement for me to make to say that five multiplied by four is the same as four multiplied by five, but that would be the
effect of what I suggest. In other trades where wages have fallen and profits have dwindled the policy of cutting down prices has been adopted. I suggest to the Chancellor of the Exchequer that he might set up some independent committee of business men to consider this question from a purely business point of view, and to find out whether there is something less than 30s. which would give a reduction of a penny a pint to the consumer. The trade might be met on the question of gravity which would allow a slightly lower quality of beer at a penny a pint reduction, and by means of increasing the turnover or preventing a further fall in consumption this might pay the revenue in the end. Undoubtedly there is a feeling, although I do not share it, that there is behind this high taxation some ulterior motive. There is a feeling amongst a large section of the community that this high taxation is being kept up in order to enforce abstinence and prohibition by means of taxation. An expert committee such as I have suggested would be able to satisfy public opinion that we are not trying to introduce so-called temperance measures by means of taxation. I do not think that this is a temperance question at all, because it is not beer that is responsible for drunkenness, but other liquors. Good beer has never been responsible for turning men and women into drunkards. With the lower-priced beer which is being sold now it is impossible for anyone to get drunk and even with the better class beer it would be a very expensive matter indeed.
With regard to this Amendment I cannot vote for the 30s. reduction, because I am not convinced, on the merits, that 30s. is necessary in order to reduce the price by 1d. per pint, and it would not all benefit the consumer. Again I am inclined to think that the 30s. would cost more money than the Chancellor of the Exchequer can afford and it might entirely upset the finances of the Budget. A suggestion has been made that we should vote for this 30s. reduction with a view to moving Amendments afterwards to reduce it, but I cannot accept that view. In the first place, I do not think that we should ever get in this Parliament an opportunity of dealing with Amendments to this new Clause if it were carried. It
is quite possible that the Government could not accept a defeat upon an Amendment of that sort. In the second place, as it has been definitely stated by those who speak for the trade that nothing less than 30s. is any use, I do not see that it is any good discussing that proposal.
Next we come to the argument that we should vote for this Clause as a protest or a demonstration against the high taxing of beer. If that is so I think we ought, before we vote, upon this Amendment, to consider the consequences of such a demonstration being successful. Personally I have no hesitation, when I think I am right in so doing, in voting against, the Government, as I felt bound to do last night, but to force a general election upon the price or taxation of an article of refreshment, however excellent it may be, is not in the best interests of the country. When there are a number of other things to be discussed which are vital to the interests of this country and the Empire, for the people of the world to know that the Government of this country had been defeated and had appealed to the country upon the question of the price of an article of refreshment would not raise the dignity of this country abroad. I do not think that it would be in the interests of this country itself that an election should be fought with that question as the main issue. We all know that at an election this is bound to come in as a side issue. We also know that there are many votes probably will be turned by the Division which is about to take place, but for an election to take place on the price of any article of food or drink as the main issue would be very bad, and it would be putting the worst side of human nature forward. Such an election would turn upon the question of the price of food or the excessive taxation of drink when other far more important things ought to be considered. I hope the Chancellor of the Exchequer will realise that many of those who will support him in the Lobby on this Amendment feel very strongly that something ought to he done; that he will realise that those who are supporting him are making big sacrifices in their own constituencies and are turning away hundreds if not thousands of votes; and that he will say something, either on the lines that I have suggested of an expert committee, or, if he cannot accept
that, something to give us some hope for the future that this burden of 7d. a pint on the agricultural labourer may be relieved.

Mr. TOWNLEY: I do not propose to follow the hon. Member who has just spoken, and who has so lucidly put before as the influence of this tax, but I would draw the attention of the Committee, if I may, to the enormous in-crease—something like 13 times—in the tax upon beer. The Chancellor of the Exchequer, in giving the remission in the tax upon clubs, which we all welcome and thank him for, did so because, he said, the increase was five times; and surely a reduction is even more justifiable when the increase is 13 times. Listening the other night to the Debate on the tea duty, I was struck by the argument of an hon. Member on the benches opposite that a remission of the duty on tea would cause the wheels of industry to be once more set going. I confess I could not altogether follow that, but I understood that he meant to say that the remission of the tea duty would give tea drinkers more money to spend, and therefore would increase trade. We do not produce tea in this country, but in appealing for a reduction of the duty upon beer, I am appealing for a means by which we may increase the production of this country and increase the demand for labour in this country. Practically all of the ingredients of beer, except sugar, are, or should be, produced in this country, and the very large taxation which has been piled up upon beer has not only reduced the consumption of beer, but has also made it more difficult for our agriculture to flourish and prosper. I, personally, have very little knowledge of the cultivation of hops, but I know that the reduction in the amount of beer consumed is a very serious matter indeed in the production of hops, and, I understand, is causing the Hop Control much anxiety. That is equally so in the case of barley, and if by taxation the consumption of beer is going to be reduced, it means that the output from our lands of England is going to be reduced, and the employment that can be given on those lands. Therefore, every time the duty upon beer is increased, the wages fund that there is for paying the agricultural labourer is reduced. The hon. Member for Hereford (Mr. S. Roberts)
has alluded to the very high price that it is for the agricultural labourer to pay. Quite so; and it is a high price for anyone to pay.
I fully realise that the Chancellor of the Exchequer has very great difficulty in meeting the loss that would accrue to him if he gave the whole of the asked-for reduction of 30s., but I hope myself that he is going to meet us by giving a partial reduction. The hon. Member for Hereford said he could not vote for this Amendment because he thought it was too large, but he warned the Chancellor of the Exchequer that many of those who would vote with him would do so with grave misgivings. I cannot follow him there. If the Chancellor of the Exchequer cannot see his way either to reduce this tax or to give any suggestion that he is going to meet us, I, for one, cannot support him in the Lobby. I feel convinced that, if he will meet us, say to the extent of a 20s. reduction, the profits of the trade can surely bear the balance which would make up the 1d. a pint. Looking at the reduced consumption now as compared with pre-War, it will be found that there are something like 4,000,000 barrels less consumed than pre-War, and surely a large amount of the tax could be got back if the pre-War consumption were resumed. I am not advocating that men should get drunk by consuming beer, and, indeed, as has been said, it is practically an impossibility at the present time; but I do feel that if a reduction of this tax involves a loss on the one hand, there will be a gain on the other. I personally am a beer drinker, and always used to have a pint of beer with my lunch, but to-day I have half a pint.
If the Chancellor will give us that reduction I cannot guarantee him his £26,000,000, but I will guarantee to drink my pint again, and I shall be very glad to do so. What is true of me is true of many a man throughout the country, whether, like myself, he works at agriculture, or whether he works in the mine. I should like to see this consumption of honest, good beer come about, because I believe that not only is beer a refreshing drink, but it is even also meat. I urge upon the Chancellor of the Exchequer to put a little pluck into himself, and, if necessary, have a little bit of a gamble.
He said that no one could guarantee that he would get back his loss by increased production. Of course, no body of men could possibly give a guarantee such as that, but if he looks at the past he will see that consumption has always increased when taxation has been reduced. Look at the effect that the Postmaster-General has found by reducing the cost of postage. Immediately there is a very large increase in the postal service, and immediately he sees a prospect of a very large increase in revenue. So I think it will be with the Chancellor of the Exchequer, but that is not my great point. My great point is that by reducing this tax and increasing the consumption of beer he will increase the demand for labour on our lands of England, and will increase the output from those lands by the home production of an honest, straightforward beverage.

Mr. FOOT: I am very hopeful the Government in this matter will stand by the terms of the Finance Bill, and refuse to yield to pressure, although that pressure has been brought to bear in an organised form. The Amendment will have practically the effect of torpedoing the Budget. Those who are advocating cheaper beer are confronted with this dilemma: Assuming there is no increase in the price of beer, one of two results must follow. Either there will be a loss to the Revenue of £22,000,000, or there must be a large increase in the consumption of beer. Although the hon. Member who has just spoken may contemplate with equanimity a large increase in the consumption of beer, there are many in this House and many throughout the country who would look upon any large increase as a menace to our social well-being.

Viscountess ASTOR: More beer, more drunkenness.

An HON. MEMBER: "Pussyfoot."

Mr. FOOT: I hear someone use the term "Pussyfoot." I think it is generally understood that the larger consumption of beer, the more trouble there is throughout the country. [HON. MEMBERS: "No!"] I had no wish to carry on the argument along these lines except to affirm the opinion that I have just expressed that there are many in this House and many
outside who look upon a large increase in the consumption of beer as being inimical to our social well-being. If the duty on the standard barrel be reduced from 100s. to 70s.—that, I understand, is the proposal—and the Revenue is maintained, the consumption must increase—and I ask the Committee to remember these figures—from 18,896,000 standard barrels to 27,000,000 standard barrels—[An HON. MEMBER: "Why not?"]—or from 24,170,000 bulk barrels of 43 degree gravity to 34,500,000 barrels, an increase of over 10,000,000 in bulk barrels. There are these further figures that I would ask the Committee to remember. The cost to the consumer would be between 40 and 50 millions of money in the course of the year to maintain the present Revenue, that is, out of the pockets of the people, at a time of financial stringency, when so many homes are suffering because there is an insufficient amount of money coming in for the ordinary purposes of food and clothing; about 22 millions would go to the Revenue and the balance would go to the Trade—a Trade that has already been able to look after itself, and which, when a duty was imposed in 1920 by the Chancellor of the Exchequer for an increase of 30s. upon a barrel was able to make a profit out of the increased tax that had been put on. These figures, I think, are indisputable when the Chancellor of the Exchequer in 1920 thought the position of the beer trade would warrant an increase of 30s. upon the barrel. Although that duty was imposed, the beer trade made a considerable profit. The increased consumption of beer has been freely prophesied, and I gather from the hon. Member who has just resumed his seat that he considers there would be no loss to the Revenue in consequence of the increased consumption following upon the reduced price, making that fear of the Exchequer groundless. I have here one of the trade papers, the "Morning Advertiser," for Monday, 27th February, 1922, in which there was a leading article on "the Budget and the Beer Duty." They stated in their leading article that the reduction in the price of beer would be followed by increased consumption, and would probably enrich the Revenue instead of impoverishing it. In the end they conclude with these words—they are trying to meet the suggestion that
something should be spent upon education rather than a sacrifice of a reduction of the Beer Duty—
A reduction of the Beer Duty would he, far more likely to render the Geddes cut in the Education Estimates unnecessary than to make it imperative.
The suggestion is that we can find by the increase in the consumption of liquor a short cut out of the economic difficulty and that we may be able to drink ourselves into national prosperity. Last week in this House there was a discussion in which I ventured to express the opinion that there was no comparison between the respective claims of a reduction of the Sugar Duty and a reduction of the Beer Duty. Presumably we have not enough money to bring about both reductions, and those who supported the Amendment to bring about a reduction in the Sugar Duty were not able to muster 100 in the Division Lobby. There cannot be, I submit, any comparison between the respective claims for a remission upon sugar and a remission upon beer. The only difference is that the consumers throughout the country of sugar are unorganised; the housewives have no organisation at their back; the children of the country, who are mainly affected by a remission in the Sugar Duty, have no organisation and cannot bring any pressure upon this House. But on beer, when a remission of the duty is asked for, there is a strongly organised demand. Will Members of the Committee consider what are the respective claims? When circumstances have arisen, and there is some abatement of our financial stringency there must be a reduction of the tax upon beer. But we are dealing with this question simply upon a fiscal basis. I cannot understand the attitude of those Members who refuse to remit any part of the tax on sugar this year and suggest an enormous remission upon the tax on beer. I hope the claim of the women and children will have first consideration. There are a great many men who drink beer and a great many who do not. They ought to have equal consideration. There are some women who drink beer and a great many who do not. Fortunately there are no children who drink beer, but all men, women and children take sugar. My suggestion is simply this. If we have so much money for the purpose of the lessening of taxation we ought to consider, first of all, the
giving of a concession that will relieve every home before we make a remission that will only touch some homes in the country.

Mr. TOWNLEY: You have had something off tea.

Mr. FOOT: I admit there has been something off tea. But, even so, I do not think the remission upon tea will meet the claim of the children in the way that sugar does. We are all sugar consumers and may not be all tea drinkers, and in that respect sugar has the greater claim. That is my contention. I hope others will be supporting me in this matter. If we are going to relieve any homes in this country we should first see to the remission of taxes that will touch every home and not remission that will only touch some of them.

Mr. GEORGE ROBERTS: One observation which the hon. Gentleman who has just resumed his seat made was that, in starting, he suggested that if the Government were to accede to the principle of this new Clause, it would cause a great deal of unrest in the country. I rise for the purpose of informing the Committee of the experience I acquired during the war. Whilst serving as Minister of Labour, it was frequently represented to me by both employers and trade union leaders that one of the great causes of industrial unrest was the high cost of beer in the country. Moreover, the Government were bound to recognise that fact. When I was transferred to the Food Control I was there made responsible, Parliamentarily, for the doings of the Liquor Control Board. The Government were then confronted with growing unrest, and we had this experience occasionally that in certain parts of the country men were detailed to follow deliveries. They would then go back and report to their workmates, and the men would leave off, and go to the public-house that had secured supplies. Time was consequently lost, and the production of munitions was frequently menaced. I will not take second place to anyone in my desire for a temperate population, but in my view temperance is not to be forced upon our people. The only sound temperance principle is by the education of the people, the gradual development and
uplifting of character. Drunkenness in the country is becoming rare, and it is a libel on our people to suggest that even were beer cheaper, there would be universal drunkenness. The great mass of the people are decent and self-restrained, and do not indulge to excess. All this talk of drunkenness is a phantasy to the mind of the temperance fanatic and is an insult to the great mass of the British people.
Now let me make the point I want to impress upon the Committee. In order to alleviate unrest, and to encourage our workpeople to proceed with the manufacture of the munitions of war, I, as Food Controller, had to be entrusted by the Liquor Control Board, acting on behalf of the Government, with supplies of beer that could be diverted into those districts where unrest was manifest, and without which supplies that unrest would have become so acute as to involve a check on the manufacture of munitions. These are facts—I am narrating my own experience—and I say that rather than a reduction in the price of beer resulting in unrest, I have every reason to believe that there is no more irritating influence in the country than the present price of beer. I am of the opinion of previous speakers that the Chancellor of the Exchequer may not find it possible to yield the amount necessary in order to effect a reduction of one penny per pint. Anything less than a penny per pint is impracticable, because there would be no assurance that the consumer would get the benefit. But I have reason to believe—and arising out of the experience I have had at the Food Control I am confirmed in my view—that the brewers were prepared.

Viscountess ASTOR: Ah!

HON. MEMBERS: Why not?

Mr. G. ROBERTS: After all, I have found the brewer I have met to be as eminently respectable and worthy of consideration as Members of this House, and just as disinterested as most of us. But I had hoped that negotiations were proceeding. I believe some have taken place, and I had been led to the belief that the result would be that the brewers would have been able to make such an offer to the Chancellor of the Ex-chequer—

Sir R. HORNE: indicated dissent.

Mr. ROBERTS: That is the belief that was conveyed to me—that a small concession on the part of the Chancellor of the Exchequer would have resulted in a reduction being effected. If my right hon. Friend says that such is not the case, I agree that he may not be in a position to give away the large sum of £18,000,000 or £20,000,000 involved in the reduction of 30s. On the other hand, I am of the opinion that the brewers, in the main, are well able to give something away towards making a substantial contribution to the relief of this problem.
I did not intend to introduce the question of temperance at all, as that is beside the point in this discussion. But there is one point I want to make. It is unfair to endeavour to pose us as being in favour of a remission of the duty on beer, and opposed to a remission of the Sugar Duty. I had hoped, and many of us had, that the Chancellor of the Exchequer would have been in that favoured position in which he might have made reductions in the main articles of food. But the point is that the Chancellor of the Exchequer was unwilling to make a concession in respect of sugar. As far as I understand it, he might have made a reduction there without any warranty whatever that the consumer would have derived any benefit. World conditions in respect of sugar supplies are such that in my opinion the Chancellor of the Exchequer on this occasion would have been but playing into the hands of a number of American speculators in sugar, and the consumer in this country would not have derived any advantage from a reduction in the sugar duty this year. Therefore, I say it is not fair to pose us as being opposed to a reduction in the price of children's sweets, and in favour of a reduction in the price of beer. I have made these few observations in view of the experience I have had, apart from my own predilections, because I have been associated with temperance nearly the whole of my life. On the other hand, I believe that the great mass of the people like and enjoy a glass of beer. Many of them find it to be a necessity, and I think it ought to be placed within their reach.

Sir R. HORNE: The right hon. Gentleman who has just sat down said quite rightly that the object of us all is to reduce taxation to the utmost possible
degree. There is no question that taxation to-day in this country is very great, and in some respects almost intolerable. If it were within my power at present to reduce, for example, the taxation upon sugar, which was most represented in the early Debates in connection with the Finance Bill, it would have been the desire of my life to effect that reduction. The increase in sugar taxation has been very great, and it has been represented in quite moderate terms as one of the staple foods of the country. One would wish, if it were possible, to reduce the taxation on sugar, not merely because of itself, but because it affects the price of so many things into which it enters. One of the great commodities which it affects is the one which we are now discussing, and I should desire for that reason, among others, that I should reduce the taxation on sugar.
The hon. Member for Bodmin (Mr. Foot), who spoke very moderately, spoke of the consumption of beer as bad for the country.

Mr. FOOT: A large extension.

Sir R. HORNE: I accept the correction. He said that a large extension of beer drinking is bad for the country. Nevertheless, the hon. Member recognises that beer is one of the first commodities on which a reduction must be granted. He puts sugar first, but he recognises that beer equally is entitled to very considerate treatment.
It has been suggested by the hon. Member for Hereford (Mr. S. Roberts), who spoke very eloquently on this matter, that there are people who imagine that there are some sinister intentions on the part of the Government, because of the high taxation at present imposed upon beer. I am sure it is quite unnecessary for me to give the Committee an assurance upon this matter. One is guided at the present time by financial considerations. I certainly am taking no part in a controversy as to whether beer is good or bad. So far as my own personal opinion is concerned, I take the view expressed by the right hon. Gentleman the Member for Norwich (Mr. G. Roberts), that experience has shown in very dark times that a great disadvantage may be suffered if you deprive the people of this legitimate enjoyment to which they have been accustomed.
Accordingly, I hope it will not be suggested that, in anything I have said, I am taking up a controversial attitude as to whether beer drinking in this country is good or bad. It has to be taken seriously into consideration that the duty on beer has risen, within a very short period, from 7s. 9d. on the barrel to 100s. That is an extraordinary increase, but it is not more extraordinary than the increase in the duty on sugar, and in both cases it is a very burdensome increase upon the price of the commodity. Accordingly, I agree that beer deserves the early consideration of the Government.
But what does this particular Amendment mean? It proposes a reduction of 30s. in the duty on the standard barrel of beer, which is 24s. on the bulk barrel. That would represent a reduction of a penny on the pint of beer, and I agree with what has been said by several hon. Gentlemen to-night, that nothing less than a penny reduction would have any effect upon the price at which beer would be sold to the consumer. I have taken very particular pains to discover what is the truth with regard to that assertion, and from every side the information comes to me that if you reduce the duty by anything less than a penny on the pint, it will never reach the consumer at all. I am sure that the Committee does not want to do anything which would have so inadequate a result as that. That means, undoubtedly, the full extent of this reduction of 30s. a barrel. What would that cost the Exchequer in a year? The sum of which it will deprive us is twenty-two million pounds sterling. That is not merely on the estimate of consumption which we put in this year's Estimates; it is upon the belief that the reduced price would result in an increased consumption of 10 per cent. over our previous Estimate. I have not yet found anyone, no matter however optimistic, who was prepared to say to me that, in the present time of bad trade and unemployment, there is likely to be a greater increase of consumption than 10 per cent. Accordingly, you have to take it, in considering this topic, that if you are to propose this reduction of 30s. it is to cost the Exchequer twenty-two million pounds. Quite frankly, I must say to the Committee that I do not know where to find the money to make up that duty.
It is suggested that some arrangement might be made with the brewers, by which they would bear a proportion of this reduction of the duty. That is another matter into which I have gone very closely and carefully with every desire to find some solution which would be agreeable to a large body of opinion in the House and in the country. The result to which I have been compelled to come is that it is impossible to make any such arrangement. I have had very extensive conversations on this matter, and I have gone into such figures as I could obtain. I have no such information as my hon. Friend the Member for Hereford (Mr. S. Roberts) in the way of the actual cost of production and so on, but beer is a matter of free competition in this country. There is no doubt that the brewers in this country, like every other type of business man, is anxious to make his trade pay in competition with his neighbours. There is no suggestion that there is any ring of brewers to keep up prices; there are too many types of brewers carrying on business in different ways, each anxious to make his business pay in competition with those around him. So far as I can gather, it is impossible to suggest that there is not a sufficiently active competition to keep prices down to the lowest economic level. This can be proved by anybody who inquires into the circumstances under which the trade is carried on. It was demonstrated to me that it was quite impossible to effect any arrangement by which the brewer would bear any appreciable portion of this reduction in duty. There is no longer any control in this country, and I do not imagine anyone in this House would suggest that we should go back to control. I have, heard a good deal this afternoon about bureaucratic interference, and I do not imagine anyone wants to go back to bureaucratic interference, nor do I believe it would be possible, even though we could carry out the modest suggestion that we should set up some special Committee to inquire into what it is possible for the brewer to do. If you once admitted that inquiry in regard to one trade you would immediately have to admit its propriety in regard to every other trade in the country, and I do not know any business man in the House who is prepared to submit his trade to that scrutiny.
1.0 A.M.
The only result, as I am sure after very careful consideration, of admitting a smaller reduction of 15s. in the duty in the belief that public clamour would force the brewer to reduce the price by 1d. a pint—the only result of such action would be, in my definite opinion, that you would have produced again au inferior quality of beer and that we should be blamed for having done something to give the working men of this country the quality of beer that he despised in the course of the War. Not only would the consumer fail to obtain any advantage from that, but the Revenue would suffer. The yield of revenue depends on the, gravity of the beer. Every reduction of a degree in gravity results in diminution of revenue by something like two million pounds per annum, and therefore the result of any such action as has been suggested would only be to give the consumer a weaker quality of beer and give the State less revenue. Having considered the matter from every point of view, and I am sure the Committee will realise that, not with lack of desire to bring about a change which many Members wish to see brought about, I have found it impossible to meet this demand at the present time in any degree whatsoever. I admit that it involves a very serious burden upon a very large mass of the people of this country. On the other band, I have got to look at the state of the revenue. I have told the Committee that the reason why we could give no reduction in the Sugar Duty was because it cost so much. A reduction of 1d. on the Sugar Duty would cost £11,000,000. The reduction of ld. in the price of the pint of beer would cost £22,000,000. I see no other way of making up that revenue than by reimposing 1s. on the Income Tax. [HON. MEMBERS "Sixpence."] Sixpense will not do it in the present year. [HON. MEMBERS: "Cut your expenses."] I would beg the Committee to face these facts, drastic as they are—the facts with which you must deal. It is no good talking about reductions of that enormous size unless you are prepared to face the consequences. I certainly have got to face the consequences, and I tell the Committee, quite frankly, that after applying the whole of my mind to the matter to
the best of my ability I have found myself utterly unable to discover any way by which I can grant this remission.

Mr. G. BALFOUR: Is it not the fact that the Chancellor has to-day between £20,000,000 and £30,000,000 carried over from last year into this year on Income Tax and Super-tax which has not yet been paid, tax which has already been fixed and settled, but the demand notes for which have not yet been presented? If he will bring that into account this year he can give the money to the remission of this tax.

Sir R. HORNE: Although we may not do all that we ought to do, we do not omit to consider a fact of that kind, and the estimate of the Revenue for the past year takes all that fully into account. There are no items of that kind left out of the account. I only wish I could think there were some adventitious sums, such as he has suggested, to drop into my lap. If there were, many other things besides beer might have obtained a remission of taxation, but I am giving the Committee my considered opinion, after having discussed every form of possible revenue and saving. I hope, indeed, to make important savings in the course of the year; but you cannot give such a large remission of taxation as £22,000,000 upon the possibility of savings that you hope for. I am sure the Committee would regard that as very bad finance on the part of the Chancellor. I need not say any more, I think, in order to make the Committee thoroughly understand the position in which we find ourselves, and the reason that it is impossible to accept the Amendment proposed.

Mr. HAYDAY: After the speech of the Chancellor of the Exchequer, one feels all the more inclined to press for a reduction of the tax. The Chancellor tells us that if he could only see any possibility of making good the apparent loss of revenue of £22,000,000 he would not hesitate, and he admits there is a real grievance in connection with this extraordinary tax upon this particular commodity. Of course, he is aware that the output is reduced by pretty well twothirds—it was in 1917 and 1918—and that it will become a lessening quantity so long as this extraordinary tax is maintained. I know something of it, because
I am the Vice-chairman of a Whitley Council dealing with the brewing trade in a very large area—I represent the employés—and we know that month by month there are reductions taking place by reason of the reduced output. Some hon. Members rather questioned the statement made by the right hon. Gentleman the Member for Norwich (Mr. G. Roberts) when he said the question of the shortage of supply and the impossible price put on the workmen's beer were contributory causes of the unrest or disgruntledness among the men. As a, matter of fact, that is a statement that holds good to-day, whatever those who advocate temperance or prohibition may think of the modest pint per day that was mentioned by the hon. Member for Houghton-le-Spring (Mr. R. Richardson). Most of us here perform sedentary duties, but I would ask the Committee to remember the case of the men engaged in the heavy and hot trades of the country. They have been subject to the greatest reductions in wages. In the iron and steel industry, men working about the furnaces have had their wages reduced to almost pre-War level. It is not a sin for a man to confess that three pints of beer a day, according to his inclination, are not more than is sufficient to enable him to get through a day's hard, heavy work in front of the furnaces or down the mine. When, as a reasonable man, that citizen finds himself confronted with the almost impossible price of beer his discontent does begin to show itself, whether it be in the home circle or at work. He has a perfect right to say that in submitting to rapid wage reductions he has made his contribution to the recovery of industry. On the other hand, the State, which has placed this burden on this beverage, has retained an embargo that, added to the falling wages, adds to his discomfort beyond all measure of the discomfort of those who have Income Tax grievances. Had this duty been put on beer drinkers as direct taxation you would have had much more noise and much more trouble than you have now, when it is put on in this indirect manner. Some hon. Members rather think the men engaged in the trade itself might help by suffering reductions in wages. Reductions in wages have taken place, but if you were to wipe out all the wages altogether in the breweries of the country you
would not, even with the reductions that are going on in the price of the raw materials that go to the manufacture of beer, enable the beer to be sold to the people at a penny a pint less. Wages are, perhaps, the smallest item in the brewing industry.
I want to say, through this Committee, to the population and to this House, that if it is thought that the men are going to sacrifice their wages in order to help to cheapen this commodity, the brewers and the public must realise that there is going to be strenuous opposition to any further reductions in wages till, by some lightening of the taxation, there is joint sacrifice all round such as will enable a reduction to be made in the price of beer to the consumer. Until then, wages are going to remain at their present level rathen than go below it. This is the greatest single item of indirect taxation in the whole country, because of the great number of the consumers who bring this revenue into the State. If when this tax was originally increased there had been only a quarter of the consumption, I question whether the tax would have been further increased at all. The burden would have been shifted on to something else. The tax would have been kept low in order to encourage the development of the industry, so that it might be a real revenue hearing industry for the Chancellor. The Chancellor of the Exchequer must realise that if the tax is retained at its present high level, not only will he get less revenue, but there will be more trouble. There will be a greater number seeking unemployment benefit, there will be less rateable value for assessment by the local authorities, there will be a general falling off all round, and it would be much wiser, by an easement of of the taxation, to let the industry develop. I want to see it develop. I am not ashamed to say that I have worked in hard trades, and been glad of my three pints a day. It is all very well to say to people working in a hot, heavy industry in the summer time that they should drink cold tea or cold water—that will give them the stomach ache—or oatmeal and water—that will overheat the blood much more. If anything could be done to give us beer of a higher gravity, stronger beer, it would be welcome. I do not believe that the trade, with its workpeople, is capable of bearing the full brunt of the reduction
of a penny a pint in the price of beer, but I do believe that if they had a reduction of £1 per standard barrel in the taxation the other 4s. could be provided by the brewers as a result of the lower price of materials used in the manufacture of beer.

Sir R. CLOUGH: I cannot help but feel that all the newspaper readers in the country will be very disappointed tomorrow when they read the speech which the Chancellor of the Exchequer delivered a few moments ago. I hope he will relent before the Finance Bill is finally passed, and that, at any rate, some reduction will be given on this very high duty. I gathered in listening to the speeches that many who have preceded me are beer drinkers and possibly some of them shareholders in brewery companies. I am neither, and although I am not prepared to promise, like the Member for West Nottingham (Mr. Hayday), that I can do my three pints a day, or like the hon. Member for Mid Bedford (Mr. Townley), to double my consumption if a reduction be made, I would admit that beer drinkers and those interested in breweries have a right to be heard. If I speak to-night, it is because I believe that those who are not strictly interested owe it as a duty to their constituents to protest against the Chancellor of the Exchequer keeping up the Beer Duty to 13 times the level it was in 1914. I understand from the Member for Bodmin (Mr. Foot) that drinking of beer is not a good thing, but whether it be a bad thing or not, we must admit that beer is the Englishman's national beverage. One can claim with fairness and without any undue boasting that the beer-drinking Briton is at least as good a citizen as the wine-drinking Frenchman, the coffee-drinking Turk, the whiskey-drinking Scot—[HON. MEMBERS: "Oh!"]—I am stating my opinion—the vodka-drinking Russian, or the iced-water sipping American. During the War, when wages were up at a very high level, it may have been proper to raise the Beer Duty to its present extortionate height, because at that time the high Beer Duty took away from the workers to the State a large proportion of their increased wages, pretty much in the same way as the Excess Profits Duty took away from manufacturers for the revenue their inflated profits. But to-day we all know
that the Excess Profits Duty has gone altogether, and the time has come when the Beer Duty should at any rate be reduced from the high level of £5 per barrel. All connected with industry know that the wages of engineers, iron-founders and miners, as well as agricultural labourers, have gone down enormously since the Beer Duty was fixed at 100 shillings per barrel. I would ask whether either Mr. Pussyfoot or any Member of Parliament believes that the manual labourer's thirst lessens automatically with the lowering of his earnings.
The right hon. Member for Norwich (Mr. G. Roberts) has said that during the War it was found and proved that scarcity of beer added to the difficulties of certain trades, and, although there may be no actual scarcity to-day, we know that the duty, if retained at the present high level, makes an artificial scarcity of beer to many wage earners of this country. Many weeks ago, when Members were agitating for a reduction of 2s. in the Income Tax and the complete abolition of the Corporation Profits Tax I felt it my duty to put down a Motion on the Paper of the House in the following terms:
That in the opinion of the House it is desirable that there shall be no reduction in the rate of Income Tax unless accompanied by a. reasonable corresponding reduction in the beer, sugar and tea duties.
I did so because I felt that if at last the Chancellor of the Exchequer found himself in a position to remit taxation, it should be done in such a way as would give some measure of relief to every man, woman and child in this country; and if the reduction of 50 millions had been shared out between a reduction of Income Tax and some remission of the beer, tea and sugar duties I claim it would have given some relief to every inhabitant of this country. A reduction of Income Tax, however desirable—and we all admit it is desirable—still makes it necessary to admit also that it does not reach every family in this country. Last week I voted with the minority for a reduction in the sugar duty. I am glad the Chancellor of the Exchequer remitted some of the taxation upon tea, and to-night, although I usually support the Government, I shall refrain from voting for them if they insist in keeping on this duty of 100 shillings per
barrel as suggested when the Budget was introduced on 1st May.
I hope that when the division is taken to-night the Committee will compel the Chancellor to reconsider his declared intention of continuing the beer duty at the high level fixed in war-time. In this way we can plainly show that unless we have a remission in the duty we cannot hope to see a reduction in the retail prices. Nearly all other commodities have fallen in value. Would anybody think of paying boom prices for house-building materials, clothing, coal or articles of food? To-day tea is cheaper, coffee is cheaper, milk is cheaper, champagne is cheaper, but a small bottle of beer still remains at 8½d. Does anybody think that a price like that is reasonable or just? I think, therefore, that the Committee would do well to lessen the amount of the injustice. A reduction in the beer duty should receive support from almost every quarter of the House. I believe a well-known politician once defined beer as liquid bread. I am not sure whether you, Sir Edwin, or I would go as far as that, but we will admit that beer has some nutritive value, and all our friends who want to reduce the tax on food should help to reduce the duty on beer. Other Members wish to see a reduction in the entertainments duty, and they also should support some reduction in the beer duty. Most Members of this House are members of one or more clubs and pay an annual subscription of anything from one to fifteen guineas or even more, and they pay the annual subscription in order to meet their friends and discuss with them finance, politics or sport. Our working men constituents cannot possibly afford to pay such a membership fee, so, instead, they go into some friendly hostelry where by purchasing a pint of beer, they may meet their chums and discuss no doubt the speeches of hon. Members or other less important or would some say more important topics. I ask whether anyone can truly say that 7d. a pint is a reasonable price for a pint of beer? Some years ago, long before the War, I happened to be President of a Conservative club where beer was sold at 2d. per pint and the annual trading accounts of that club showed such a huge profit that the members induced the committee to reduce the price from 2d. to 1½d. a pint. I can assure the Committee that there was
still a margin of profit shown on the trading accounts of that club. I sometimes wonder, when one talks of the good old days, whether it dates back to the time when decent beer could be bought at 2d. or 1½d. per pint. I do not know, Sir, whether you know Yorkshire well. But there is a saying which is pretty commonly used, "There is good beer and better beer, but. no bad beer." To-day the true rendering of that would be, "There is dear beer and there is weak beer, but there is no cheap beer." I had hoped that the discussion on the beer duty would, at any rate, if it did not give cheap beer would give cheaper beer than has existed for some time. In conclusion, may I point out to the Chancellor of the Exchequer that the consumption of beer steadily fell in 1921, and is still decreasing. Therefore, I would urge the Committee to see to it that we do not drive the working men and women of this country away from drinking their national beverage—beer—to something less wholesome and more mischievous.

Mr. RONALD McNEILL: The hon. Member who has just set down, when be gave some indication that he was bringing his remarks to a close, elicited such obvious tokens of disappointment to the Committee that I think I ought to add a few observations. All I want to do is to express the hope that the Committee will not feel themselves intimidated by the speech which was made by the Chancellor of the Exchequer. The Chancellor told us, after expressing very great sympathy with the Amendment before the Committee, that the only possible way of replacing the revenue which would be lost by accepting this Amendment was by reimposing a shilling on the Income Tax. But a reimposition of a shilling on the Income Tax cannot be done by the Chancellor of the Exchequer. It must be done by the Committee, and I hope the Committee will take the attitude which I intend to take and to vote for this Amendment with the strongest possible resolution not to allow the Chancellor of the Exchequer to make up the revenue from the reimposition of a shilling Income Tax. I do not believe there is any such necessity. To begin with, as one hon. Member has already suggested, I believe it will be found that the Budget of this year leaves a very much larger margin of revenue than the
Chancellor of the Exchequer has yet acknowledged. But even if that were not so, there are many other sources of revenue which the Chancellor of the Exchequer has not yet tapped. My hon. and learned Friend who is now representing the Government will remember many Debates which we have had in the House in the past on the question of enlarging the basis of taxation. That has never yet been done, but the resources of civilisation in that respect have not been exhausted. It is not for me to suggest the way that revenue could be obtained, because, as my right hon. Friend knows, it is not open to a private Member of this House to move a charge upon the taxpayer. That is the duty of the Government. But do let the Committee realise that there are a great many sources of indirect taxation which might perfectly well be resorted to if the necessity should arise. Feeling as I do, as much as any hon. Gentleman who has spoken of the absolute necessity of putting the national beverage—for it is that—of Englishmen into their hands at a more reasonable price than they have recently been paying, it is the incumbent duty of the Government to find a substitute for the revenue which they will lose in this respect.
There has been a certain amount of opinion expressed this evening that it would not be to the advantage of the country if there was any large increase in beer drinking, and it has been assumed that you cannot largely increase the consumption without leading to excess drinking by the individual. That is the greatest possible fallacy. I entirely share the view of the hon. Gentleman who spoke a moment ago from the Labour Benches, that some three or four pints a day of good beer is not excessive drinking, especially in some of the more exhausting employments in which men are engaged. The amount, of course, an individual can take without harm to himself or anybody else is a matter for his own judgment. But let us bear this in mind—you can increase the consumption of beer very largely without increasing the individual consumption of any man, because there must be very large numbers of people now who, owing to the price or for other reasons, abstain altogether from taking beer, may take a small quantity without any harm to themselves or to anybody else, and would give the
revenue which the Government wants. Therefore, do let the Committee make up its mind that we are not necessarily on the horns of the dilemma which the Chancellor of the Exchequer put before us. Let us vote boldly for this reduction in order that we may get our beer for lunch or dinner a penny a pint cheaper, in common with the rest of our fellow-countrymen, and let us not allow the Chancellor of the Exchequer for one moment to carry out the threat that he has made, and let us demand from him that, he shall make the revenue good, if it is required, out of some sources which have not yet been disclosed, if at the end of the year it is found there is not already sufficient margin to meet the deficit that will be caused.

Lieut. - Commander KENWORTHY: The most important statement the Chancellor of the Exchequer made was that if this reduction of a penny per pint, which the Amendment seeks to bring about, took place, the consumption of beer would only go up 10 per cent. This means that you are going to relieve the beer drinkers of this country, who are, after all, in the great majority manual labourers, of a taxation of nearly nine-tenths of 22 millions a year. Where is that money going to which will he lost to the Exchequer in taxation on beer? It is going to he spent by them more largely on their families. They will be able to afford more and better food. They will be able to take their families to amusements. They will be able to spend more on clothing. This will mean about £20,000,000 worth extra trade in the country, because the people who will get this relief are not the class who spend money abroad. They are the class who spend it in the home market. Although, apparently, we shall lose a certain amount of revenue, we are bound to gain by better trade, which means better Income Tax receipts; by less unemployment, which means less; paid out in unemployment relief. Altogether there will not be a loss of £20,000,000 or anything like it. The next point which was very strikingly made, by the Chancellor of the Exchequer was that the only means of making good the relief in Beer Duties demanded by the people of the country was by taxing some other class or imposing some other duty. The question of savings or even an alteration of policy which would lead to savings
apparently has not dawned on the Cabinet. I intend to make it clear, as far as my own constituents are concerned, and as far as any other constituency I address is concerned, that the Government is unable to give this relief to the consumers of beer because their policy will not allow them to save. I am also going to point out where savings could be made without any loss to the country, and where a great deal could be gained by a change of policy in withdrawing from parts of the world where we have no business to be. That is as much as I will say on that subject now. A change of policy would make this saving possible.
I am going to vote for this Amendment because I consider that the tax is extremely unfair to a class of man who is suffering, particularly at the present time, namely, the unskilled labourer and the casual labourer. I am as strongly in favour of Temperance Measures as anyone in this House, but I think it is extremely unfair to make men teetotallers by compulsion, and that is what you are doing at the present moment in thousands of cases throughout the country. There is the added danger that, by making it expensive to drink beer, the men who want alcohol will turn to spirit drinking, with worse results. A man who wants alcohol will take to spirit drinking, and is doing so now in many cases, I am advised, with harmful result [HON. MEMBERS: "Divide!"] This is the first time I have addressed the Committee to-day, and I do not think I should he interrupted by the hon. Member for Montrose (Mr. Sturrock) or any of his Friends.
One of the most powerful speeches made by an opponent of this Amendment was that made by the hon. Member for Hereford (Mr. S. Roberts) who told us that if we were to beat the Government there would be an election on the beer issue. The hon. Member does not understand the Prime Minister, who is quite capable of inventing some other cry which would bring more credit to himself and he does not know the present mood of the people of the country, who have many other things to discuss besides the question of beer. We need not he afraid of that and our dignity before foreign countries. Let us give the Chancellor of the Exchequer a lesson, and the only way to do that is in the Division Lobbies.
It is only by votes that any impression will be made on the Government and bring relief to men who are being very hardly and unfairly treated.

Colonel ASHLEY: I do not think we ought to go to a Division without considering one very deserving class of people, namely, the agricultural labourer. An hon. Member opposite laid down that a man doing heavy work ought to have, quite legitimately, three pints of beer a day. What can the agricultural labourer possibly get at the present moment? His wages have fallen from 46s. a week to 30s. If he has to pay even 6d. for a pint of beer and takes one a day that would take 3s. 6d. out of his small wage of 30s. The agricultural labourer has a very hard time. He has few amusements, he has few prospects for advancement, he very often has a large family, and I think the Committee ought to consider whether by keeping this heavy tax they are treating this deserving class of man really fairly. You are practically preventing the agricultural labourer having his one solace during the day. You are preventing him having what he is entitled to in order to carry on his work. The farmer are unable to give him higher wages owing to the depression in agriculture, and that is a condition which ought to be in the minds of hon. Members when they go to a Division.

Mr. FRANCE: It would be an act of cowardice on my part if I did not explain why I shall vote for the Government in resisting this Amendment. So far there has been only one speech in favour of the Government. I do not want to discuss beer as a beverage, or the amount a man may with advantage drink. I am not going into extraneous details as to my own habits. All I would say, as one who is privileged to employ a few people to assist in certain enterprises, is that I know for myself which class of person I find most efficient in their work. [HON. MEMBERS: "Which is it?"] Those who do not take beer or any other alcoholic beverage to excess. That, however, is a matter of opinion, and I do not intend to go into it. The speech which impressed me most in this Debate was that of the right hon. Gentleman the Member for Norwich (Mr. G. Roberts). It was a speech which I was sorry he found it necessary to make. It was a speech which I regard as a most serious indictment of the working classes;
a speech which told us that during the tragedies, anxieties, and terrors of the War there were those at home who did not go out to fight, but who were not content to work because of the amount of beer that they could drink. I consider that to be a libel on the working man. I have many friends among the miners of Northumberland and Yorkshire and among other workers, and I say a statement of that kind is not one which is fair to them. I believe in this matter we should look upon it largely as a fiscal question. The question of sugar has been raised. No remission of taxation on sugar has been possible, and sugar is practically a necessity. It enters into the food of practically every section of the community. It is also used for many manufactures. But beer is, and must be admitted to be, in the nature of a luxury. The beer tax is in a sense a sumptuary tax. No man is compelled to pay it, and if a man finds it necessary to drink beer, then he must at a time of financial necessity make his contribution to the welfare of the country.
I resent exceedingly and regret very deeply the kind of pressure which has been put upon Members with regard to this matter. The right hon. Gentleman the Member for Norwich spoke of the brewers and all those engaged in the sale and manufacture of drink as being disinterested. I do not agree with him, but I want to say that I believe a great deal of the agitation and resolutions we receive from the clubs, and professedly from working men do not come genuinely from the working men as a class, are engineered and circulated by those interested in the sale of liquor.

Viscountess ASTOR: Everyone knows that.

Mr. FRANCE: The hon. Member is not helping the cause by the interruptions she is now making. I regret exceedingly, and I think it is a degradation of Members of Parliament that 150 Members of this House pledged themselves before the Debate, and before they heard what the Chancellor had to say, to vote for this Amendment. That is a pressure and degradation that should not he put upon Members of Parliament.

Captain GEE: There are one or two points in regard to this question which have not been touched upon. The tax upon beer has been increased during the
last few years to the extent of 13 times. In pre-War times the tax on beer, when we could get it at threepence a pint, was a farthing; now, when we have to pay sevenpence a pint for what is called beer, the tax is 3½d. I suggest it, is in the interest of the Government themselves as business men to reduce this taxation. There is one other point. The Chancellor of the Exchequer said the reduction of one degree in the gravity of beer would mean a reduction of two million pounds of revenue, but I think, in fairness to the Committee, he should have told us the other side, which is that since 1919 every increase in the gravity has brought in an additional revenue for each degree, and we have been consuming twenty or thirty million barrels.
Very few hon. Members have tried to point out to the Chancellor of the Exchequer how he is going to get his money, and it is perhaps unbecoming on the part of so young a Member as I am to try to do so. I am not going to point out where he might get the twenty-two millions, but I am going to point out where I think he has already got it. I may be wrong, but unless I get an answer to this statement I mean to vote against the Government. If I find I am wrong, I will support them. One hon. Member spoke about twenty million pounds of unpaid Excess Profits Duty. I think it is between fifty and sixty millions. The Chancellor of the Exchequer says he has already taken that into account. I do not suggest that the Chancellor of the Exchequer manipulates and controls the money markets of the world or of the. Empire, but when he introduced his Budget he was paying for the Floating Debt interest at the rate of 5 per cent. Since the Budget. I think he has been paying for Floating Debt interest of 3 per cent. Where is the money representing that difference, between 3 and 5 per cent. on 850 million pounds?

Sir R. HORNE: There is a disparity between the interest on the Floating Debt at the time the Budget speech was made and the present rate, which is not so much. But we have calculated in the present year, before the Budget was presented, that there would be a lowering of interest in the course of the present year, and we have made all allowances for that which we considered would be justified.

The CHAIRMAN: Having received an answer to his question, the hon. Member cannot be allowed to continue a general discussion on that topic.

Captain GEE: One other point ought to be cleared up. The Chancellor of the Exchequer informed the Committee that he had been in conversation or communication with members of the trade and that he was in hopes that he could meet them by the State giving up some of the taxation and the trade meeting them in the balance, and be informed the Committee that he had been unable to arrive at a solution. I think that is a very serious statement. I put the entire onus of this inability of the Government to reduce this taxation on the trade themselves, because I really think that it is possible for the Chancellor to make a reduction and for the trade to make a reduction. I really think a solution could be found if we could get a Committee set up to go into this thing with the Treasury Bench and the trade.

Mr. REMER: The Chancellor of the Exchequer seems to me to be placing the supporters of the Government in a position of very great difficulty. I am one of those who have supported the Government almost consistently and in almost every division of this Session, and I think that we are entitled to some further information as to the negotiations which have taken place with the brewers on the question of the extent to which they are able to make a reduction in the price of beer. I have had conversations with a number of brewers in which they thought they could reduce the price of beer. I understand that there is great division of opinion among the brewers concerned and that they can reduce the price of beer. I have been going into some figures. [HON. MEMBERS: "Divide!"] I am going to finish what I have to say.

Mr. INSKIP: Circulate it in the OFFICIAL REPORT.

Mr. REMER: The Chancellor of the Exchequer has told us that a reduction of 1d. on the pint of beer would result in a loss of £24,000,000 to the revenue. [HON. MEMBERS: "£22,000,000!"] I think I am correct in the way I am putting it.

Mr. R. McNEILL: You are more royalist than the King.

Mr. REMER: I think that is allowing for the 10 per cent. increase in the consumption. If, instead of taking off 30s. per barrel, you were to take off only 15s., it would mean a loss to the revenue of only £12,000,000. I believe the brewers can easily afford a reduction in their profits amounting to £12,000,000. I believe they are making very large profits. I have gone into the figures very extensively, and I find that their profits are very much larger than £12,000,000, and if the Chancellor of the Exchequer would only take a bold line, and a plucky line, it would result in a reduction of ld. per pint to the working people of the country and would cost him only £12,000,000. Out of that £12,000,000, £4,000,000 would come to the Chancellor of the Exchequer in the form of Income Tax, and therefore the total loss to the revenue would be only £8,000,000. As to his statement that the brewers would reduce the gravity of their beer, I think public opinion is so strong on the point that we should see not only that there was a reduction of 1d., but that the gravity remained at the present level. I am sure that if the Chancellor of the Exchequer would only take a strong line on this question that he might be quite sure the loss to the revenue which he fears would not exist.

Mr. MACQUISTEN: My apology for speaking is in some of the speeches that have gone before. This is a very unfortunate Motion that has been made; it is very unfair to Scotland. The question of the duty on beer should have been taken in conjunction with the duty on whisky. It is very unfair of Englishmen to steal a march on the Scotsmen. I believe that beer is a food. Undoubtedly whisky is a medicine. I admit that Scotch people take their medicine with great regularity and, indeed, many Members of this House have acquired the Scotch practice. The Chancellor of the Exchequer does not expect to lose much on the beer duty through the falling off in consumption. From the fiscal point of view he has a great deal to say for himself on the subject of beer; but on the whisky duty he has lost £7,500,000 last year, and he will lose £15,000,000 in the year to come. It is perfectly clear. I have a bundle of newspaper cuttings here—I will not read them—setting forth the illicit distilling that is going on. In a question a few weeks ago I put it to the Chancellor of the Exchequer that one distillery
had been discovered capable of turning out 250 gallons per week. The duty on that would be £1,000 a week, or £50,000 a year. I suggested to him that here was probably an explanation of the falling off in the Whisky Duty. I was told—in fact, the Procurator Fiscal said—it was a very high quality of whisky that was produced. I suggested to the Chancellor of the Exchequer that this still had been in existence for a considerable time. The Chancellor of the Exchequer said he had no reason to believe that it had been in existence for any length of time, but when one of the staff of the distillery was fined he admitted that he had joined the staff Is months before. The judge said this kind of thing must be put down with a strong hand and fined him £300, or a third of one week's duty. This whisky is being sold all over the place; they are selling it at £2 a gallon, and it is going like the wind. There is no doubt this is spreading all over the place, and when people have such enormous funds at their disposal it is not difficult to get matters hushed up. They even managed to connect direct with the gas mains, so as not to show the amount of gas they were consuming.

The DEPUTY-CHAIRMAN (Sir Edwin Cornwall): The hon. Member must confine his remarks to the beer duty.

Mr. MACQUISTEN: I am simply using this as an illustration of a fiscal argument.

The DEPUTY-CHAIRMAN: It went beyond an illustration and became an argument.

Mr. R. MCNEILL: On a point of Order. The Chancellor of the Exchequer has pointed out that he cannot find revenue if this Amendment be carried. It is not open to an hon. Member to show that revenue is being lost through the process which he has described, and that if the revenue authorities were more vigilant in collecting the whisky duty, they would have the money to reduce the beer duty?

The DEPUTY-CHAIRMAN: I am afraid it would be quite out of order to explore that source of revenue on the Motion that a Clause as to one particular duty be read a Second time. The hon. Member would see how far we could go in that direction.

Mr. MACQUISTEN: This duty is levied on alcohol, and there is alcohol
in beer. [HON. MEMBERS: "No!" and "Withdraw!"] I admit it is almost impossible to identify it in present-day beer; it requires almost a chemical analysis to identify it. We do not want to have anything in the nature of prohibition either by taxation or legislation because it would only lead to us becoming a nation of "boodlers," like another great branch of the Anglo-Saxon race. We do not want "boot-legging" and the illicit brewing of beer to become one of our principal industries. I suggest that the Chancellor of the Exchequer should remember the words of the Old Book—
There is that scattereth and yet increaseth.
If he could see his way to give something of a reduction I believe he would find that the consumption would increase enormously. What chiefly brought me to my feet were the remarks of the hon. Member for Morley (Mr. Prance). He made a serious attack on the right hon. Member for Norwich (Mr. G. Roberts) because he told of his experiences as Food Controller, and how people resented the reduction in the supplies of beer. I disagree with him entirely. The people did not believe these were bonâ fide reductions, and they resented the attempt which was undoubtedly made to take advantage of the crisis of a great war to push a particular piece of fanaticism. That is what they resented. They resented the insult of "the lure of drink," and other cant phrases that were used to explain the shortage of munitions, when it was really the Government's own mismanagement that brought about that state of things, and they put down their feet stubbornly. An effort was made either to nationalise the drink trade or to enforce prohibition. The thing was tried in parts of Scotland, and you could buy drink by the gallon where you could not buy it by the gill. That is what caused dissatisfaction. I think the right hon. Member for Norwich gave a perfectly faithful illustration. I would like the Chancellor of the Exchequer to give us some hope for the future—something that we could look forward to in the way of reduction.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 102; Noes, 184.

Division No. 181.]
AYES.
[11.40 p.m.


Adamson, Rt. Hon. William
Guest, J. (York, W.R., Hemsworth)
Randall, Athelstan


Banton, George
Hall, F. (York, W.R., Normanton)
Richardson, R. (Houghton-le-Spring)


Barker, G. (Monmoutn, Abortillery)
Hartshorn, Vernon
Rose, Frank H.


Barnes, Major H. (Newcastle, E.)
Hayday, Arthur
Royce, William Stapleton


Barton, Sir William (Oldham)
Hayward, Evan
Short, Alfred (Wednesbury)


Benn, Captain Wedgwood (Leith)
Hirst, G. H.
Sitch, Charles H.


Bowerman, Rt. Hon. Charles W.
Hogge, James Myles
Swan, J. E.


Bramsdon, Sir Thomas
Holmes, J. Stanley
Thomas, Brig.-Gen. Sir O. (Anglesey)


Briant, Frank
Irving, Dan
Thomson, T. (Middlesbrough, West)


Bromfield, William
John, William (Rhondda, West)
Walsh, Stephen (Lancaster, Ince)


Cairns, John
Kenworthy, Lieut.-Commander J. M.
Watts-Morgan, Lieut.-Col. D.


Carter, W. (Nottingham, Mansfield)
Lawson, John James
White, Charles F. (Derby, Western)


Collins, Sir Godfrey (Greenock)
Lunn, William
Wignall, James


Davies, A. (Lancaster, Ciltheroe)
Maclean, Rt. Hn. Sir D. (Midlothian)
Williams, Col. P. (Middlesbrough, E.)


Edwards, C. (Monmouth, Bedwellty)
Mosley, Oswald
Wintringham, Margaret


Foot, Isaac
Murray, Dr. D. (Inverness & Ross)



Gillis, William
Naylor, Thomas Ellis
TELLERS FOR THE AYES.—


Gretton, Colonel John
O'Grady, Captain James
Mr. Morgan Jones and Mr.


Grundy, T. W.
Raffan, Peter Wilson
Myers.


NOES.


Adkins, Sir William Ryland Dent
Curzon, Captain Viscount
Hohier, Gerald Fitzroy


Agg-Gardner, Sir James Tynte
Davidson, J. C. C. (Hemel Hempstead)
Holbrook, Sir Arthur Richard


Ainsworth, Captain Charles
Davidson, Major-General Sir J. H.
Hood, Sir Joseph


Allen, Lieut.-Col. Sir William James
Davies, Alfred Thomas (Lincoln)
Hope, Sir H. (Stirling & Cl'ckm'nn, W.)


Amery, Rt. Hon. Leopold C. M. S.
Davies, David (Montgomery)
Hope, Lt.-Col. Sir J. A. (Midlothian)


Armstrong, Henry Bruce
Davies, Thomas (Cirencester)
Hope, J. D. (Berwick & Haddington)


Ashley, Colonel Wilfrid W.
Davison, Sir W. H. (Kensington, S.)
Hopkins, John W. W.


Astor, Viscountess
Dawson, Sir Philip
Hopkinson, A. (Lancaster, Mossley)


Atkey, A. R.
Dewhurst, Lieut.-Commander Harry
Horne, Edgar (Surrey, Guildford)


Baird, Sir John Lawrence
Doyle, N. Grattan
Horne, Sir R. S. (Glasgow, Hillhead)


Baldwin, Rt. Hon. Stanley
Du Pre, Colonel William Baring
Howard, Major S. G.


Balfour, George (Hampstead)
Edgar, Clifford B.
Hunter, General Sir A. (Lancaster)


Barker, Major Robert H.
Ednam, Viscount
Hurd, Percy A.


Barlow, Sir Montague
Erskine, James Malcolm Monteith
Inskip, Thomas Walker H.


Barnett, Major Richard W.
Evans, Ernest
Jackson, Lieut.-Colonel Hon. F. S.


Barnston, Major Harry
Eyres-Monsell, Com. Bolton M.
Jameson, John Gordon


Bell, Lieut.-Col. W. C. H. (Devizes)
Falcon, Captain Michael
Jephcott, A. R.


Bellairs, Commander Carlyon W.
Falle, Major Sir Bertram Godfray
Johnstone, Joseph


Benn, Sir A. S. (Plymouth, Drake)
Fildes, Henry
Jones, Henry Haydn (Merioneth)


Bennett, Sir Thomas Jewell
Fisher, Rt. Hon. Herbert A. L.
Jones, J. T. (Carmarthen, Llanelly)


Betterton, Henry B.
Ford, Patrick Johnston
Kellaway, Rt. Hon. Fredk. George


Birchall, J. Dearman
Foreman, Sir Henry
Kelley, Major Fred (Rotherham)


Bird, Sir R. B. (Wolverhampton, W.)
Forestier-Walker, L.
Kidd, James


Blake, Sir Francis Douglas
Forrest, Walter
King, Captain Henry Douglas


Blane, T. A.
Foxcroft, Captain Charles Talbot
Kinloch-Cooke, Sir Clement


Borwick, Major G. O.
Fraser, Major Sir Keith
Lane-Fox, G. R.


Boscawen, Rt. Hon. Sir A. Griffith-
Fremantle, Lieut.-Colonel Francis E.
Larmor, Sir Joseph


Bowyer, Captain G. W. E.
Ganzoni, Sir John
Law, Alfred J. (Rochdale)


Brassey H. L. C.
Gee, Captain Robert
Lewis, Rt. Hon. J. H. (Univ., Wales)


Breese, Major Charles E.
George, Rt. Hon. David Lloyd
Lewis, T. A. (Glam., Pontypridd)


Bridgeman, Rt. Hon. William Clive
Gibbs, Colonel George Abraham
Lindsay, William Arthur


Briggs, Harold
Gilbert, James Daniel
Lloyd, George Butler


Broad, Thomas Tucker
Gilmour, Lieut.-Colonel Sir John
Locker-Lampson, G. (Wood Green)


Brotherton, Colonel Sir Edward A.
Goff, Sir R. Park
Locker-Lampson, Com. O. (H'tingd'n)


Brown, Brig.-Gen. Clifton (Newbury)
Goulding, Rt. Hon. Sir Edward A.
Lorden, John William


Bruton, Sir James
Gray, Major Ernest (Accrington)
Lort-Williams, J.


Buckley, Lieut.-Colonel A.
Green, Joseph F. (Leicester, W.)
Lowther, Major C. (Cumberland, N.)


Burdon, Colonel Rowland
Greene, Lt.-Col. Sir W. (Hackn'y, N.)
Lyle, C. E. Leonard


Burgoyne, Lt.-Col. Sir Alan Hughes
Greenwood, Rt. Hon. Sir Hamar
McLaren, Hon. H. D. (Leicester)


Burn, Col. C. R. (Devon, Torquay)
Grenfell, Edward Charles
McLaren, Robert (Lanark, Northern)


Butcher, Sir John George
Guest, Capt. Rt. Hon. Frederick E.
M'Lean, Lieut.-Col. Charles W. W.


Campion, Lieut.-Colonel W. R.
Guthrie, Thomas Maule
McNeill, Ronald (Kent, Canterbury)


Carr, W. Theodore
Gwynne, Rupert S.
Macpherson, Rt. Hon. James I.


Casey, T. W.
Hacking, Captain Douglas H.
Mallalieu, Frederick William


Cautley, Henry Strother
Hall, Lieut.-Col. Sir F. (Dulwich)
Malone, Major P. B. (Tottenham, S.)


Cecil, Rt. Hon. Sir Evelyn (Aston)
Hall, Rr-Adml Sir W. (Liv'p'l,W.D'by)
Manville, Edward


Chamberlain, N. (Birm., Ladywood)
Hamilton, Sir George C.
Marriott, John Arthur Ransoms


Child, Brigadier-General Sir Hill
Hannon, Patrick Joseph Henry
Martin, A. E.


Churchman, Sir Arthur
Harmsworth, C. B. (Bedford, Luton)
Matthews, David


Clay, Lieut.-Colonel H. H. Spender
Harmsworth, Hon. E. C. (Kent)
Mond, Rt. Hon. Sir Alfred Moritz


Clough, Sir Robert
Haslam, Lewis
Moore-Brabazon, Lieut.-Col. J. T. C.


Coats, Sir Stuart
Henderson, Lt.-Col. V. L. (Tradeston)
Morden, Col. W. Grant


Cockerill, Brigadler-General G. K.
Hennessy, Major J. R. G.
Moreing, Captain Algernon H.


Colfox, Major Wm. Phillips
Herbert, Dennis (Hertford, Watford)
Morrison, Hugh


Colvin, Brig.-General Richard Beale
Hills, Major John Waller
Morrison-Bell, Major A. C.


Cope, Major William
Hinds, John
Munro, Rt. Hon. Robert


Cory, Sir C. J. (Cornwall, St. Ives)
Hoare, Lieut.-Colonel Sir S. J. G.
Murchison, C. K.


Murray, Hon. A. C. (Aberdeen)
Roberts, Rt. Hon. G. H. (Norwich)
Thomson, F. C. (Aberdeen, South)


Murray, Rt. Hon. C. D. (Edinburgh)
Roberts, Samuel (Hereford, Hereford)
Thomson, Sir W. Mitchell- (Maryhill)


Murray, John (Leeds, West)
Robinson, S. (Brecon and Radnor)
Thorpe, Captain John Henry


Nall, Major Joseph
Robinson, Sir T. (Lancs., Stretford)
Townley, Maximilian G.


Neal, Arthur
Roundell, Colonel R. F.
Tryon, Major George Clement


Newman, Colonel J. R. P. (Finchley)
Samuel, A. M. (Surrey, Farnham)
Turton, Edmund Russborough


Newman, Sir R. H. S. D. L. (Exeter)
Samuel, Samuel (W'dsworth, Putney)
Vickers, Douglas


Newson, Sir Percy Wilson
Sanders, Colonel Sir Robert Arthur
Wallace, J.


Newton, Sir D. G. C. (Cambridge)
Sassoon, Sir Philip Albert Gustave D.
Walters, Rt. Hon. Sir John Tudor


Nicholson, Brig.-Gen. J. (Westminster)
Scott, A. M. (Glasgow, Bridgeton)
Walton, J. (York, W. R., Don Valley)


Nicholson, Reginald (Doncaster)
Scott, Sir Leslie (Liverp'l, Exchange)
Ward, Col. L. (Kingston-upon-Hull)


Nicholson, William G. (Petersfleid)
Seddon, J. A.
Ward, William Dudley (Southampton)


Nield, Sir Herbert
Seely, Major-General Rt. Hon. John
Waring, Major Walter


Norman, Major Rt. Hon. Sir Henry
Shaw, Hon. Alex. (Kilmarnock)
Warner, Sir T. Courtenay T.


Norris, Colonel Sir Henry G.
Shaw, William T. (Forfar)
Watson, Captain John Bertrand


Ormsby-Gore, Hon. William
Shortt, Rt. Hon. E. (N'castle-on-T.)
Weston, Colonel John Wakefield


Palmer, Major Godfrey Mark
Simm, M. T.
Wheler, Col. Granville C. H.


Palmer, Brigadier-General G. L.
Smith, Sir Allan M. (Croydon, South)
White, Cal. G. D. (Southport)


Parker, James
Smith, Sir Harold (Warrington)
Willey, Lieut.-Colonel F. V.


Parry, Lieut.-Colonel Thomas Henry
Sprot, Colonel Sir Alexander
Williams, C. (Tavistock)


Pease, Rt. Hon. Herbert Pike
Stanley, Major Hon. G. (Preston)
Wilson, Lt.-Col. Sir M. (Bethnal Gn.)


Peel, Col. Hon. S. (Uxbridge, Mddx.)
Stanton, Charles Butt
Wilson, Col. M. J. (Richmond)


Perkins, Walter Frank
Starkey, Captain John Ralph
Windsor, Viscount


Pickering, Colonel Emil W.
Steel, Major S. Strang
Winterton, Earl


Pinkham, Lieut.-Colonel Charles
Stephenson, Lieut.-Colonel H. K.
Wise, Frederick


Pollock, Rt. Hon. Sir Ernest Murray
Stewart, Gershom
Wood, Hon. Edward F. L. (Ripon)


Poison, Sir Thomas A.
Strauss, Edward Anthony
Wood, Sir H. K. (Woolwich, West)


Pownall, Lieut.-Colonel Asshcton
Sturrock, J. Leng
Wood, Sir J. (Stalybridge & Hyde)


Pratt. John William
Sueter, Rear-Admiral Murray Fraser
Worthington-Evans, Rt. Hon. Sir L.


Pretyman, Rt. Hon. Ernest G.
Sugdon, W. H.
Yeo, Sir Alfred William


Purchase, H. G.
Surtees, Brigadier-General H. C.
Young, Sir Frederick W. (Swindon)


Rae, Sir Henry N.
Sutherland, Sir William
Younger, Sir George


Remer, J. R.
Sykes, Sir Charles (Huddersfield)



Richardson, Sir Alex. (Gravesend)
Taylor, J.
TELLERS FOR THE NOES.—


Richardson, Lt.-Col. Sir P. (Chertsey)
Thomas, Sir Robert J. (Wrexham)
Mr. McCurdy and Colonel Leslie Wilson.

Division No 182.]
AYES.
[2.10 a.m.


Agg-Gardner, Sir James Tynte
Gretton, Colonel John
Nall, Major Joseph


Ashley, Colonel Wilfrid W.
Grundy, T. W.
Naylor, Thomas Ellis


Balfour, George (Hampstead)
Guest, J. (York, W. R., Hemsworth)
Newton, Sir D. G. C. (Cambridge)


Banton, George
Hall, Rr-Adml Sir W.(Liv'p'l,W.D'bv)
Nicholson, Brig.-Gen, J. (Westminster)


Barker, G. (Monmouth, Abertillery)
Hannon, Patrick Joseph Henry
Nicholson, William G. (Petersfield)


Barker, Major Robert H.
Harmsworth, Hon. E. C. (Kent)
O'Grady, Captain James


Barton, Sir William (Oldham)
Hartshorn, Vernon
Perkins, Walter Frank


Bell, Lieut.-Col. W. C. H. (Devizes)
Hayday, Arthur
Pinkham, Lieut.-Colonel Charles


Bird, Sir R. B. (Wolverhampton, W.)
Hayward, Evan
Polson, Sir Thomas A.


Blane, T. A.
Hills, Major John Waller
Rae, Sir Henry N.


Bowerman, Rt. Hon. Charles W.
Hirst, G. H.
Remer, J. R.


Bowyer, Captain G. W. E.
Holbrook, Sir Arthur Richard
Rendall, Athelstan


Bromfield, William
Holmes, J. Stanley
Richardson, Sir Alex. (Gravesend)


Bruton, Sir James
Hurd, Percy A.
Rose, Frank H.


Burn, Col. C. R. (Devon, Torquay)
Irving, Dan
Roundell, Colonel R. F.


Cairns, John
James, Lieut.-Colonel Hon. Cuthbert
Royce, William Stapleton


Carter, W. (Nottingham, Mansfield)
Jephcott, A. R.
Seddon, J. A.


Cautley, Henry Strother
John, William (Rhondda, West)
Short, Alfred (Wednesbury)


Clough, Sir Robert
Jones, Morgan (Caerphilly)
Sitch, Charles H.


Cowan, D. M. (Scottish Universities)
Kelley, Major Fred (Rotherham)
Smith, Sir Allan M. (Croydon, South)


Curzon, Captain Viscount
Kenworthy, Lieut.-Commander J. M.
Stanton, Charles Butt


Davies, A. (Lancaster, Clitheroe)
Kidd, James
Steel, Major S. Strang


Davies, Alfred Thomas (Lincoln)
Kiley, James Daniel
Strauss, Edward Anthony


Davison, Sir W. H. (Kensington, S.)
Law, Alfred J. (Rochdale)
Sugden, W. H.


Dawson, Sir Philip
Lawson, John James
Swan, J. E.


Dewhurst, Lieut.-Commander Harry
Lunn, William
Sykes, Sir Charles (Huddersfield)


Doyle, N. Grattan
Lyle-Samuel, Alexander
Townley, Maximilian G.


Edwards, C. (Monmouth, Bedwellty)
McNeill, Ronald (Kent, Canterbury)
Walsh, Stephen (Lancaster, Ince)


Erskine, James Malcolm Monteith
Macquisten, F. A.
Watts-Morgan, Lieut.-Col. D.


Falcon, Captain Michael
Malone, Major P. B. (Tottenham, S.)
White, Charles F. (Derby, Western)


Foreman, Sir Henry
Manville, Edward
Wignall, James


Foxcroft, Captain Charles Talbot
Martin, A. E.
Wood, Major Sir S. Hill- (High Peak)


Ganzoni, Sir John
Mosley, Oswald



Gillis, William
Murchison, C. K.
TELLERS FOR THE AYES.—


Goff, Sir R. Park
Myers, Thomas
Mr. Robert Richardson and Mr. Frederick Hall.




NOES.


Ainsworth, Captain Charles
Davidson, Major-General Sir J. H.
Jameson, John Gordon


Allen, Lieut.-Col. Sir William James
Davies, David (Montgomery)
Johnstone, Joseph


Amery, Rt. Hon. Leopold C. M. S.
Du Pre, Colonel William Baring
Jones, Henry Haydn (Merioneth)


Armstrong, Henry Bruce
Edge, Captain Sir William
Jones, J, T. (Carmarthen, Llanelly)


Astor, Viscountess
Ednam, Viscount
Kellaway, Rt. Hon. Fredk. George


Atkey, A. R.
Edwards, Major J. (Aberavon)
King, Captain Henry Douglas


Baird, Sir John Lawrence
Evans, Ernest
Lane-Fox, G. R.


Baldwin, Rt. Hon. Stanley
Eyres-Monsell, Com. Bolton M.
Larmor, Sir Joseph


Barlow, Sir Montague
Falle, Major Sir Bertram Godfray
Lewis, Rt. Hon. J. H. (Univ., Wales)


Barnes, Major H. (Newcastle, E.)
Fisher, Rt. Hon. Herbert A. L.
Lewis, T. A. (Glam., Pontypridd)


Barnett, Major Richard W.
Foot, Isaac
Lindsay, William Arthur


Barnston, Major Harry
Ford, Patrick Johnston
Locker-Lampson, Com. O. (H'tingd'n)


Bellairs, Commander Canyon W.
Forestler-Walker, L.
Lorden, John William


Benn, Sir A. S. (Plymouth, Drake)
Forrest, Walter
Lort-Williams, J.


Bennett, Sir Thomas Jewell
France, Gerald Ashburner
Lowther, Maj.-Gen. Sir C. (Penrith)


Bentinck, Lord Henry Cavendish-
Fraser, Major Sir Keith
McLaren, Hon. H. D. (Leicester)


Birchall, J. Dearman
Fremantle, Lieut-Colonel Francis E.
McLaren, Robert (Lanark, Northern)


Blake, Sir Francis Douglas
Gee, Captain Robert
M'Lean, Lieut.-Col. Charles W. W.


Borwick, Major G. O.
George, Rt. Hon. David Lloyd
Maclean, Rt. Hn. Sir D. (Midlothian)


Boscawen, Rt. Hon. Sir A. Griffith-
Gibbs, Colonel George Abraham
Macpherson, Rt. Hon. James I.


Bramsdon, Sir Thomas
Gilmour, Lieut.-Colonel Sir John
Mallalieu, Frederick William


Brassoy, H. L. C.
Gould, James C.
Mond, Rt. Hon. Sir Alfred Moritz


Breese, Major Charles E.
Gray, Major Ernest (Accrington)
Moore-Brabazon, Lieut.-Col. J. T. C.


Briant, Frank
Green, Joseph F. (Leicester, W.)
Moreing, Captain Algernon H.


Bridgeman, Rt. Hon. William Clive
Greene, Lt.-Col. Sir W. (Hack'y, N.)
Morrison, Hugh


Broad, Thomas Tucker
Greenwood, Rt. Hon. Sir Hamar
Morrison-Bell, Major A. C.


Brotherton, Colonel Sir Edward A.
Grenfell, Edward Charles
Munro, Rt. Hon. Robert


Brown, Brig.-Gen. Clifton (Newbury)
Guest, Capt. Rt. Hon. Frederick E.
Murray, Hon. A. C. (Aberdeen)


Buckley, Lieut.-Colonel A.
Guthrie, Thomas Maule
Murray. Rt. Hon. C. D. (Edinburgh)


Burgoyne, Lt.-Col. Sir Alan Hughes
Hacking, Captain Douglas H.
Murray, Dr. D. (Inverness & Ross)


Butcher, Sir John George
Hamilton, Sir George C.
Murray, John (Leeds, West)


Campion, Lieut.-Colonel W. R.
Harmsworth, C. B. (Bedford, Luton)
Neal, Arthur


Carr, W. Theodore
Haslam, Lewis
Newman, Colonel J. R. P. (Finchley)


Casey, T. W.
Henderson, Lt.-Col. V. L. (Tradeston)
Newman, Sir R. H. S. D. L. (Exeter)


Chamberlain, N. (Birm., Ladywood)
Hinds, John
Nicholson, Reginald (Doncaster)


Child, Brigadier-General Sir Hill
Hoare, Lieut.-Colonel Sir S. J. G.
Nield, Sir Herbert


Clay, Lieut.-Colonel H. H. Spender
Hohler, Gerald Fitzroy
Norman, Major Rt. Hon. Sir Henry


Coats, Sir Stuart
Hope. Sir H. (Stirling & Cl'ckm'nn,W.)
Norton-Griffiths, Lieut.-Col. Sir John


Cockerill, Brigadier-General G. K.
Hope, Lt.-Col. Sir J. A. (Midlothian)
Ormsby-Gore, Hon. William


Colfox, Major Wm. Phillips
Hope, J. D. (Berwick & Haddington)
Palmer, Major Godfrey Mark


Collins, Sir Godfrey (Greenock)
Hopkins, John W. W.
Parker, James


Colvin, Brig.-General Richard Beale
Hopkinson, A. (Lancaster, Mossley)
Parry, Lieut.-Colonel Thomas Henry


Cope, Major William
Horne, Sir R. S. (Glasgow, Hillhead)
Pease, Rt. Hon. Herbert Pike


Cory, Sir C. J. (Cornwall, St. Ives)
Hunter, General Sir A. (Lancaster)
Peel, Col. Hon. S. (Uxbridge, Mddx.)


Davidson, J. C. C. (Hemel Hempstead)
Inskip, Thomas Walker H.
Pickering, Colonel Emil W.




Pollock, Rt. Hon. Sir Ernest Murray
Starkey, Captain John Ralph
Williams, C. (Tavistock)


Pownall, Lieut.-Colonel Assheton
Stephenson, Lieut.-Colonel H. K.
Williams, Col. P. (Middlesbrough, E.)


Pratt, John William
Sturrock, J. Long
Wilson, Lt.-Col. Sir M. (Bethnal Gn.)


Purchase, H. G.
Sutherland, Sir William
Wilson, Col. M. J. (Richmond)


Raffan, Peter Wilson
Thomson, F. C. (Aberdeen, South)
Winterton, Earl


Richardson, Lt.-Col. Sir P. (Chertsey)
Thomson, T. (Middlesbrough, West)
Wintringham, Margaret


Roberts, Samuel (Hereford, Hereford)
Thomson, Sir W. Mitchell- (Maryhill)
Wise, Frederick


Robinson, S. (Brecon and Radnor)
Thorpe, Captain John Henry
Wood, Hon. Edward F. L. (Ripon)


Robinson, Sir T. (Lancs., Stretford)
Tryon, Major George Clement
Wood, Sir H. K. (Woolwich, West)


Samuel, Samuel (W'dsworth, Putney)
Turton, Edmund Russborough
Wood, Sir J. (Stalybridge & Hyde)


Sanders, Colonel Sir Robert Arthur
Wallace, J.
Worthington-Evans. Rt. Hon. Sir L.


Sassoon, Sir Philip Albert Gustave D
Walters, Rt. Hon. Sir John Tudor
Yeo, Sir Alfred William


Scott, A. M. (Glasgow, Bridgeton)
Ward, William Dudley (Southampton)
Young, Sir Frederick W. (Swindon)


Scott, Sir Leslie (Liverp'l, Exchange)
Waring, Major Walter



Seely, Major-General Rt. Hon. John
Warner, Sir T. Courtenay T.
TELLERS FOR THE NOES.—


Shaw, William T. (Forfar)
Watson, Captain John Bertrand
Colonel Leslie Wilson and Mr.


Shortt, Rt. Hon. E. (N'castle-on-T.)
Wheler, Col. Granville C. H.
McCurdy.


Stanley, Major Hon. G. (Preston)
White, Col. G. D. (Southport)

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Sir R. Horne].

Committee report Progress; to sit again To-morrow (Wednesday).

NEW CLAUSE.—(Amendment of 10 Edw. VII., c. 8, s. 48.)

Section forty-eight of The Finance (1909–10) Act, 1910 (which provides for a duty on purchases of intoxicating liquor to be supplied in a club), shall have effect as if "threepence" were therein substituted for "sixpence."—[Mr. Robert Richardson.]

Brought up, and read the First time.

Mr. R. RICHARDSON: I beg to move "That the Clause be read a Second time."

Sir R. HORNE: I am prepared to accept the principle of the Clause. A similar Clause was moved last year by the hon. and learned Member for York (Sir J. Butcher), and on that. occasion I promised to give close consideration to the question. I realised there was great force and cogency in the argument that this was a tax upon a tax and that the increased duty put upon intoxicating liquor had had the effect of increasing the club tax to some-
thing more than five times the original imposition. I promised I would go closely into the matter, and I must confess the hon. and learned Member for York has not allowed me to forget that promise. I do not think he has let me off for more than a month at a time. His efforts have been reinforced in recent times by suggestions made to me by the hon. Member for Middleton (Sir Ryland Adkins). I came to the conclusion the claim was justified; accordingly I am prepared to meet what is required by this proposed new Clause, the particular form of which is not, however, entirely agreeable. If it is withdrawn now, I shall on the Report stage, in another form, do what the Mover of the Amendment desires—namely, see that the club duty is decreased by half.

Sir J. BUTCHER: I desire, on behalf of those who have acted in this matter, to thank the Chancellor for having met the Amendment so fairly. It was moved almost on the same day of the month last year. It came on at four o'clock in the morning, and, with most commendable consideration, the Government gave us fairplay in regard to the Clause and promised us to reconsider it this year. The Chancellor of the Exchequer has now fulfilled his pledge, and I desire to thank him most sincerely.

Captain WEDGWOOD BENN: Usually on an Amendment the Chancellor of the Exchequer meets it with a simple statement of the cost of the Amendment to the Exchequer. He has not given us that statement, and I think it is due to the Committee to be told exactly how much revenue he proposes to sacrifice by the concession which he has just announced.

Sir R. HORNE: If I have failed in my duty to the hon. and gallant Member, I shall be prepared at once to respond to his question, but I presumed the Committee was well aware of the sum, as this matter was discussed at great length on the previous occasion. The cost to the Exchequer of this concession will be £189,000.

Sir H. NIELD: As the official head of half a million clubmen who have plied the Chancellor habitually with resolutions on this question, I wish to thank him very warmly for his concession.

Mr. R. RICHARDSON: In asking leave to withdraw my Clause, may I say that I heartily thank the right hon. Gentleman the Chancellor of the Exchequer, on behalf of a million and a quarter of clubmen?

Motion and Clause, by leave, withdrawn.

Orders of the Day — ADOPTION OF CHILDREN BILL.

Read a Second time, and committed to a Standing Committee.

The remaining Order, were read, and postponed.

It being after half-past Eleven of the Clock upon Tuesday evening, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Twenty Minutes after Two o'Clock.